Correlation Between Ford and RILIN

Can any of the company-specific risk be diversified away by investing in both Ford and RILIN at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ford and RILIN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ford Motor and RILIN 3625 12 JAN 52, you can compare the effects of market volatilities on Ford and RILIN and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ford with a short position of RILIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and RILIN.

Diversification Opportunities for Ford and RILIN

0.26

Correlation Coefficient

Ford  RILIN

Modest diversification

The 3 months correlation between Ford and RILIN is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and RILIN 3625 12 JAN 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RILIN 3625 12 and Ford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ford Motor are associated (or correlated) with RILIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RILIN 3625 12 has no effect on the direction of Ford i.e., Ford and RILIN go up and down completely randomly.

Pair Corralation between Ford and RILIN

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the RILIN. In addition to that, Ford is 2.15 times more volatile than RILIN 3625 12 JAN 52. It trades about -0.04 of its total potential returns per unit of risk. RILIN 3625 12 JAN 52 is currently generating about -0.02 per unit of volatility. If you would invest  7,109  in RILIN 3625 12 JAN 52 on September 25, 2024 and sell it today you would lose (110.00) from holding RILIN 3625 12 JAN 52 or give up 1.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	42.86%
Values	Daily Returns

Ford Motor  vs.  RILIN 3625 12 JAN 52

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

RILIN 3625 12

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RILIN 3625 12 JAN 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for RILIN 3625 12 JAN 52 investors.

Pair Trading with Ford and RILIN

The main advantage of trading using opposite Ford and RILIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, RILIN can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in RILIN will offset losses from the drop in RILIN's long position.

The idea behind Ford Motor and RILIN 3625 12 JAN 52 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.