Correlation Between FIBRA Storage and Ford

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

Diversification Opportunities for FIBRA Storage and Ford

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between FIBRA and Ford is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding FIBRA Storage and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and FIBRA Storage 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 FIBRA Storage are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of FIBRA Storage i.e., FIBRA Storage and Ford go up and down completely randomly.

Pair Corralation between FIBRA Storage and Ford

Assuming the 90 days trading horizon FIBRA Storage is expected to generate 2.05 times less return on investment than Ford. But when comparing it to its historical volatility, FIBRA Storage is 2.05 times less risky than Ford. It trades about 0.03 of its potential returns per unit of risk. Ford Motor is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  19,406  in Ford Motor on September 14, 2024 and sell it today you would earn a total of  1,599  from holding Ford Motor or generate 8.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

FIBRA Storage  vs.  Ford Motor

 Performance 
       Timeline  
FIBRA Storage 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in FIBRA Storage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, FIBRA Storage exhibited solid returns over the last few months and may actually be approaching a breakup point.
Ford Motor 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Ford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

FIBRA Storage and Ford Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FIBRA Storage and Ford

The main advantage of trading using opposite FIBRA Storage and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIBRA Storage position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.
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The idea behind FIBRA Storage and Ford Motor 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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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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