Correlation Between Ford and Solid Power
Can any of the company-specific risk be diversified away by investing in both Ford and Solid Power 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 Solid Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Solid Power, you can compare the effects of market volatilities on Ford and Solid Power 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 Solid Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Solid Power.
Diversification Opportunities for Ford and Solid Power
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and Solid is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Solid Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Power 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 Solid Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Power has no effect on the direction of Ford i.e., Ford and Solid Power go up and down completely randomly.
Pair Corralation between Ford and Solid Power
Given the investment horizon of 90 days Ford Motor is expected to generate 0.16 times more return on investment than Solid Power. However, Ford Motor is 6.16 times less risky than Solid Power. It trades about 0.04 of its potential returns per unit of risk. Solid Power is currently generating about -0.24 per unit of risk. If you would invest 2,289 in Ford Motor on November 1, 2024 and sell it today you would earn a total of 17.00 from holding Ford Motor or generate 0.74% 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. Solid Power
Performance |
| Timeline |
| Ford Motor |
| Solid Power |
Ford and Solid Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Solid Power
The main advantage of trading using opposite Ford and Solid Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Solid Power 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 Solid Power will offset losses from the drop in Solid Power's long position.The idea behind Ford Motor and Solid Power 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.| Solid Power vs. Plug Power | Solid Power vs. FREYR Battery SA | Solid Power vs. FuelCell Energy | Solid Power vs. Enovix Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |