Correlation Between Ford and Steelcase

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

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

Diversification Opportunities for Ford and Steelcase

0.58

Correlation Coefficient

Ford  Steelcase

Very weak diversification

The 3 months correlation between Ford and Steelcase is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Steelcase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelcase 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 Steelcase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steelcase has no effect on the direction of Ford i.e., Ford and Steelcase go up and down completely randomly.

Pair Corralation between Ford and Steelcase

Given the investment horizon of 90 days Ford is expected to generate 4.99 times less return on investment than Steelcase. But when comparing it to its historical volatility, Ford Motor is 10.57 times less risky than Steelcase. It trades about 0.27 of its potential returns per unit of risk. Steelcase is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  992.00  in Steelcase on May 21, 2025 and sell it today you would earn a total of  624.00  from holding Steelcase or generate 62.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Ford Motor  vs.  Steelcase

Ford Motor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Ford exhibited solid returns over the last few months and may actually be approaching a breakup point.

Steelcase

Risk-Adjusted Performance

Fair

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

Pair Trading with Ford and Steelcase

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

The idea behind Ford Motor and Steelcase 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.