Correlation Between Ford and JD Health

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

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

Diversification Opportunities for Ford and JD Health

0.43

Correlation Coefficient

Ford  JD Health

Very weak diversification

The 3 months correlation between Ford and JDHIY is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and JD Health International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Health International 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 JD Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Health International has no effect on the direction of Ford i.e., Ford and JD Health go up and down completely randomly.

Pair Corralation between Ford and JD Health

Taking into account the 90-day investment horizon Ford is expected to generate 2.21 times less return on investment than JD Health. But when comparing it to its historical volatility, Ford Motor is 1.37 times less risky than JD Health. It trades about 0.1 of its potential returns per unit of risk. JD Health International is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  320.00  in JD Health International on September 3, 2024 and sell it today you would earn a total of  61.00  from holding JD Health International or generate 19.06% 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.  JD Health International

Ford Motor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

JD Health International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD Health International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, JD Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and JD Health

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

The idea behind Ford Motor and JD Health International 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.