Correlation Between Ford and Aim Treasurers

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

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

Diversification Opportunities for Ford and Aim Treasurers

0.44

Correlation Coefficient

Ford  Aim Treasurers

Very weak diversification

The 3 months correlation between Ford and Aim is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Aim Treasurers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Treasurers Series 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 Aim Treasurers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Treasurers Series has no effect on the direction of Ford i.e., Ford and Aim Treasurers go up and down completely randomly.

Pair Corralation between Ford and Aim Treasurers

Taking into account the 90-day investment horizon Ford Motor is expected to generate 19.75 times more return on investment than Aim Treasurers. However, Ford is 19.75 times more volatile than Aim Treasurers Series. It trades about 0.02 of its potential returns per unit of risk. Aim Treasurers Series is currently generating about 0.12 per unit of risk. If you would invest  1,105  in Ford Motor on February 7, 2024 and sell it today you would earn a total of  145.00  from holding Ford Motor or generate 13.12% return on investment over 90 days.

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

Ford Motor  vs.  Aim Treasurers Series

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Aim Treasurers Series

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aim Treasurers Series are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aim Treasurers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Aim Treasurers

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

The idea behind Ford Motor and Aim Treasurers Series 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 CEOs Directory module to screen CEOs from public companies around the world.