Correlation Between Ford and Cano Health

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Can any of the company-specific risk be diversified away by investing in both Ford and Cano Health 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 Cano Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Cano Health, you can compare the effects of market volatilities on Ford and Cano Health 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 Cano Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Cano Health.

Diversification Opportunities for Ford and Cano Health

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Ford and Cano is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Cano Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cano Health 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 Cano Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cano Health has no effect on the direction of Ford i.e., Ford and Cano Health go up and down completely randomly.

Pair Corralation between Ford and Cano Health

If you would invest  1,122  in Ford Motor on August 28, 2024 and sell it today you would earn a total of  18.00  from holding Ford Motor or generate 1.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

Ford Motor  vs.  Cano Health

 Performance 
       Timeline  
Ford Motor 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.
Cano Health 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Cano Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cano Health is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ford and Cano Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ford and Cano Health

The main advantage of trading using opposite Ford and Cano Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Cano Health 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 Cano Health will offset losses from the drop in Cano Health's long position.
The idea behind Ford Motor and Cano Health 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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