Correlation Between Ford and Honda

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

Specify exactly 2 symbols:

Can any of the company-specific risk be diversified away by investing in both Ford and Honda at the same time? Although using correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combing Ford and Honda into the same portfolio which is an essential part of fundamental portfolio management process.

Diversification Opportunities for Ford and Honda

0.9
Correlation
<div class='circular--portrait-small' style='font-weight: 700;background:#FF6600;color: #FFFAFA;font-size:0.9em;padding-top: 12px;;'>FOR</div>
<div class='circular--portrait-small' style='font-weight: 700;background:#FF6600;color: #FFFAFA;font-size:0.9em;padding-top: 12px;;'>HMC</div>

Almost no diversification

The 3 months correlation between Ford and Honda is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor Company and Honda Motor Company Ltd in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor 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 Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Ford i.e. Ford and Honda go up and down completely randomly.

Pair Corralation between Ford and Honda

Taking into account the 30 trading days horizon, Ford Motor is expected to under-perform the Honda. In addition to that, Ford is 1.55 times more volatile than Honda Motor. It trades about -0.04 of its total potential returns per unit of risk. Honda Motor is currently generating about -0.02 per unit of volatility. If you would invest  2,586  in Honda Motor on April 25, 2020 and sell it today you would lose (213.00)  from holding Honda Motor or give up 8.24% of portfolio value over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Ford Motor Company  vs.  Honda Motor Company Ltd

 Performance (%) 
      Timeline 
Ford Motor 
00

Ford Risk-Adjusted Performance

Over the last 30 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of sluggish performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in June 2020. The ongoing tumult may also be a sign of longer-term up-swing for the firm shareholders.
Honda Motor 
00

Honda Risk-Adjusted Performance

Over the last 30 days Honda Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Honda is not utilizing all of its potentials. The ongoing stock price disturbance, may contribute to short term losses for the investors.

Ford and Honda Volatility Contrast

 Predicted Return Density 
      Returns 
Check out your portfolio center. Please also try Commodity Channel Index module to use commodity channel index to analyze current equity momentum.


 
Macroaxis is not a registered investment advisor or broker/dealer. All investments, including stocks, funds, ETFs, or cryptocurrencies, are speculative and involve substantial risk of loss. We encourage our investors to invest carefully. Much of our information is derived directly from data published by companies or submitted to governmental agencies which we believe are reliable, but are without our independent verification. Therefore, we cannot assure you that the information is accurate or complete. We do not in any way warrant or guarantee the success of any action you take in reliance on our statements or recommendations. Also, note that past performance is not necessarily indicative of future results. All investments carry risk, and all investment decisions of an individual remain the responsibility of that individual. There is no guarantee that systems, indicators, or signals will result in profits or that they will not result in losses. All investors are advised to fully understand all risks associated with any investing they choose to do. Hypothetical or simulated performance is not indicative of future results. We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown because hypothetical or simulated performance is not necessarily indicative of future results. For more information please visit our terms and condition page