Correlation Between Ford and PERSIMMON PLC

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

Diversification Opportunities for Ford and PERSIMMON PLC

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Ford and PERSIMMON is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PERSIMMON PLC - in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PERSIMMON PLC - 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 PERSIMMON PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PERSIMMON PLC - has no effect on the direction of Ford i.e., Ford and PERSIMMON PLC go up and down completely randomly.

Pair Corralation between Ford and PERSIMMON PLC

If you would invest  1,312  in Ford Motor on December 30, 2023 and sell it today you would earn a total of  16.00  from holding Ford Motor or generate 1.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.2%
ValuesDaily Returns

Ford Motor  vs.  PERSIMMON PLC -

 Performance 
       Timeline  
Ford Motor 

Risk-Adjusted Performance

7 of 100

 
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High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Ford reported solid returns over the last few months and may actually be approaching a breakup point.
PERSIMMON PLC - 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days PERSIMMON PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PERSIMMON PLC is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Ford and PERSIMMON PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ford and PERSIMMON PLC

The main advantage of trading using opposite Ford and PERSIMMON PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, PERSIMMON PLC 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 PERSIMMON PLC will offset losses from the drop in PERSIMMON PLC's long position.
The idea behind Ford Motor and PERSIMMON PLC 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.

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