Correlation Between Ford and Pax Msci

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

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

Diversification Opportunities for Ford and Pax Msci

0.68

Correlation Coefficient

Ford  Pax Msci

Poor diversification

The 3 months correlation between Ford and Pax is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pax Msci Eafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Msci Eafe 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 Pax Msci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Msci Eafe has no effect on the direction of Ford i.e., Ford and Pax Msci go up and down completely randomly.

Pair Corralation between Ford and Pax Msci

Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.09 times more return on investment than Pax Msci. However, Ford is 2.09 times more volatile than Pax Msci Eafe. It trades about 0.06 of its potential returns per unit of risk. Pax Msci Eafe is currently generating about 0.05 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  53.00  from holding Ford Motor or generate 5.15% return on investment over 90 days.

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

Ford Motor  vs.  Pax Msci Eafe

Ford Motor

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) 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.

Pax Msci Eafe

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pax Msci Eafe are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pax Msci is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Pax Msci

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

The idea behind Ford Motor and Pax Msci Eafe 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.