Correlation Between Allot Communications and Ford

Can any of the company-specific risk be diversified away by investing in both Allot Communications 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 Allot Communications and Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Allot Communications and Ford Motor, you can compare the effects of market volatilities on Allot Communications 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 Allot Communications with a short position of Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allot Communications and Ford.

Diversification Opportunities for Allot Communications and Ford

0.79

Correlation Coefficient

Allot Communications  Ford

Poor diversification

The 3 months correlation between Allot and Ford is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Allot Communications and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Allot Communications 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 Allot Communications 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 Allot Communications i.e., Allot Communications and Ford go up and down completely randomly.

Pair Corralation between Allot Communications and Ford

Given the investment horizon of 90 days Allot Communications is expected to under-perform the Ford. In addition to that, Allot Communications is 1.36 times more volatile than Ford Motor. It trades about -0.04 of its total potential returns per unit of risk. Ford Motor is currently generating about 0.01 per unit of volatility. If you would invest  1,256  in Ford Motor on January 25, 2024 and sell it today you would earn a total of  35.00  from holding Ford Motor or generate 2.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Allot Communications  vs.  Ford Motor

Allot Communications

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allot Communications are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Allot Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ford Motor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allot Communications and Ford

The main advantage of trading using opposite Allot Communications and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allot Communications 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.

The idea behind Allot Communications 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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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.