Correlation Between Ford and Spectrum Advisors

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

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

Diversification Opportunities for Ford and Spectrum Advisors

0.77

Correlation Coefficient

Ford  Spectrum Advisors

Poor diversification

The 3 months correlation between Ford and Spectrum is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Spectrum Advisors Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Advisors 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 Spectrum Advisors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Advisors has no effect on the direction of Ford i.e., Ford and Spectrum Advisors go up and down completely randomly.

Pair Corralation between Ford and Spectrum Advisors

Taking into account the 90-day investment horizon Ford Motor is expected to generate 3.99 times more return on investment than Spectrum Advisors. However, Ford is 3.99 times more volatile than Spectrum Advisors Preferred. It trades about 0.1 of its potential returns per unit of risk. Spectrum Advisors Preferred is currently generating about 0.12 per unit of risk. If you would invest  1,156  in Ford Motor on September 6, 2025 and sell it today you would earn a total of  158.00  from holding Ford Motor or generate 13.67% 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.  Spectrum Advisors Preferred

Ford Motor

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 7 (%) 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.

Spectrum Advisors

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Spectrum Advisors Preferred are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Spectrum Advisors 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 Spectrum Advisors

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

The idea behind Ford Motor and Spectrum Advisors Preferred 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..