Correlation Between Ford and Medical Properties

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

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

Diversification Opportunities for Ford and Medical Properties

-0.63

Correlation Coefficient

Ford  Medical Properties

Excellent diversification

The 3 months correlation between Ford and Medical is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Medical Properties Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Properties Trust 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 Medical Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Properties Trust has no effect on the direction of Ford i.e., Ford and Medical Properties go up and down completely randomly.

Pair Corralation between Ford and Medical Properties

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.81 times more return on investment than Medical Properties. However, Ford Motor is 1.23 times less risky than Medical Properties. It trades about 0.07 of its potential returns per unit of risk. Medical Properties Trust is currently generating about -0.16 per unit of risk. If you would invest  1,029  in Ford Motor on May 6, 2025 and sell it today you would earn a total of  66.00  from holding Ford Motor or generate 6.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Medical Properties Trust

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Medical Properties Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medical Properties Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in September 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ford and Medical Properties

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

The idea behind Ford Motor and Medical Properties Trust 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.