# Correlation Between Twitter and Ford

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

## Diversification Opportunities for Twitter and Ford

 0.06 Correlation Coefficient

### Significant diversification

The 3 months correlation between Twitter and Ford is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Twitter and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Twitter 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 Twitter 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 Twitter i.e., Twitter and Ford go up and down completely randomly.

## Pair Corralation between Twitter and Ford

Given the investment horizon of 90 days Twitter is expected to under-perform the Ford. In addition to that, Twitter is 1.13 times more volatile than Ford Motor. It trades about -0.01 of its total potential returns per unit of risk. Ford Motor is currently generating about 0.03 per unit of volatility. If you would invest  1,112  in Ford Motor on November 6, 2022 and sell it today you would earn a total of  211.00  from holding Ford Motor or generate 18.97% return on investment over 90 days.
 Time Period 3 Months [change] Direction Moves Together Strength Insignificant Accuracy 86.72% Values Daily Returns

 Performance (%)
 Timeline
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Over the last 90 days Twitter has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Twitter is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
 Ford Motor Correlation Profile
Ford Performance
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Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

### Ford Price Channel

 Performance Backtest Predict

## Twitter and Ford Volatility Contrast

 Predicted Return Density
 Returns