Correlation Between Ford and M Food
Can any of the company-specific risk be diversified away by investing in both Ford and M Food 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 M Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and M Food SA, you can compare the effects of market volatilities on Ford and M Food 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 M Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and M Food.
Diversification Opportunities for Ford and M Food
Average diversification
The 3 months correlation between Ford and MFD is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and M Food SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Food SA 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 M Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Food SA has no effect on the direction of Ford i.e., Ford and M Food go up and down completely randomly.
Pair Corralation between Ford and M Food
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.46 times more return on investment than M Food. However, Ford Motor is 2.19 times less risky than M Food. It trades about 0.0 of its potential returns per unit of risk. M Food SA is currently generating about -0.07 per unit of risk. If you would invest 1,173 in Ford Motor on September 3, 2024 and sell it today you would lose (60.00) from holding Ford Motor or give up 5.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 62.4% |
| Values | Daily Returns |
Ford Motor vs. M Food SA
Performance |
| Timeline |
| Ford Motor |
| M Food SA |
Ford and M Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and M Food
The main advantage of trading using opposite Ford and M Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, M Food 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 M Food will offset losses from the drop in M Food's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| M Food vs. Asseco Business Solutions | M Food vs. Detalion Games SA | M Food vs. Kogeneracja SA | M Food vs. Asseco South Eastern |
Check out your portfolio center.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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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