Correlation Between Ford and Tuesday Morning

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

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

Diversification Opportunities for Ford and Tuesday Morning

0.0

Correlation Coefficient

Ford  Tuesday Morning

Pay attention - limited upside

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

Pair Corralation between Ford and Tuesday Morning

If you would invest  1,244  in Ford Motor on January 26, 2024 and sell it today you would earn a total of  51.00  from holding Ford Motor or generate 4.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	28.57%
Values	Daily Returns

Ford Motor  vs.  Tuesday Morning Corp

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 unsteady technical and fundamental indicators, Ford reported solid returns over the last few months and may actually be approaching a breakup point.

Tuesday Morning Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tuesday Morning Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Tuesday Morning is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ford and Tuesday Morning

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

The idea behind Ford Motor and Tuesday Morning Corp 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.