Correlation Between Ford and Compass Minerals

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

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

Diversification Opportunities for Ford and Compass Minerals

-0.29

Correlation Coefficient

Ford  Compass Minerals

Very good diversification

The 3 months correlation between Ford and Compass is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Compass Minerals International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Minerals Int 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 Compass Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Minerals Int has no effect on the direction of Ford i.e., Ford and Compass Minerals go up and down completely randomly.

Pair Corralation between Ford and Compass Minerals

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.75 times more return on investment than Compass Minerals. However, Ford Motor is 1.33 times less risky than Compass Minerals. It trades about 0.11 of its potential returns per unit of risk. Compass Minerals International is currently generating about 0.01 per unit of risk. If you would invest  1,129  in Ford Motor on September 10, 2025 and sell it today you would earn a total of  179.00  from holding Ford Motor or generate 15.85% return on investment over 90 days.

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

Ford Motor  vs.  Compass Minerals International

Ford Motor

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford reported solid returns over the last few months and may actually be approaching a breakup point.

Compass Minerals Int

Risk-Adjusted Performance

Weakest

Over the last 90 days Compass Minerals International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Compass Minerals is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ford and Compass Minerals

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

The idea behind Ford Motor and Compass Minerals 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.