Correlation Between DAIMLER AG and Ford

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

Diversification Opportunities for DAIMLER AG and Ford

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between DAIMLER and Ford is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding DAIMLER AG and Ford Motor in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and DAIMLER AG 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 DAIMLER AG 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 DAIMLER AG i.e., DAIMLER AG and Ford go up and down completely randomly.

Pair Corralation between DAIMLER AG and Ford

Assuming the 90 days horizon DAIMLER AG is expected to generate 0.73 times more return on investment than Ford. However, DAIMLER AG is 1.37 times less risky than Ford. It trades about 0.13 of its potential returns per unit of risk. Ford Motor is currently generating about -0.24 per unit of risk. If you would invest  6,275  in DAIMLER AG on February 16, 2022 and sell it today you would earn a total of  386.00  from holding DAIMLER AG or generate 6.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

DAIMLER AG  vs.  Ford Motor

 Performance (%) 
      Timeline 
DAIMLER AG 
DAIMLER Performance
0 of 100
Over the last 90 days DAIMLER AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in June 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DAIMLER Price Channel

Ford Motor 
Ford Performance
0 of 100
Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in June 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Ford Price Channel

DAIMLER AG and Ford Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with DAIMLER AG and Ford

The main advantage of trading using opposite DAIMLER AG and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIMLER AG 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 DAIMLER AG 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.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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