Correlation Between Ford and Atea PharmaceuticalsI

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

By analyzing existing cross correlation between Ford Motor and Atea PharmaceuticalsInc, you can compare the effects of market volatilities on Ford and Atea PharmaceuticalsI 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 Atea PharmaceuticalsI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Atea PharmaceuticalsI.

Diversification Opportunities for Ford and Atea PharmaceuticalsI

0.23

Correlation Coefficient

Ford  Atea PharmaceuticalsI

Modest diversification

The 3 months correlation between Ford and Atea is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Atea PharmaceuticalsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea PharmaceuticalsInc 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 Atea PharmaceuticalsI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea PharmaceuticalsInc has no effect on the direction of Ford i.e., Ford and Atea PharmaceuticalsI go up and down completely randomly.

Pair Corralation between Ford and Atea PharmaceuticalsI

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Atea PharmaceuticalsI. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.1 times less risky than Atea PharmaceuticalsI. The stock trades about -0.14 of its potential returns per unit of risk. The Atea PharmaceuticalsInc is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  395.00  in Atea PharmaceuticalsInc on January 20, 2024 and sell it today you would lose (25.00) from holding Atea PharmaceuticalsInc or give up 6.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Ford Motor  vs.  Atea PharmaceuticalsInc

Ford Motor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Atea PharmaceuticalsInc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Atea PharmaceuticalsInc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Atea PharmaceuticalsI is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ford and Atea PharmaceuticalsI

The main advantage of trading using opposite Ford and Atea PharmaceuticalsI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Atea PharmaceuticalsI 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 Atea PharmaceuticalsI will offset losses from the drop in Atea PharmaceuticalsI's long position.

The idea behind Ford Motor and Atea PharmaceuticalsInc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.