Correlation Between Ford and FIRST NATIONAL
Can any of the company-specific risk be diversified away by investing in both Ford and FIRST NATIONAL 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 FIRST NATIONAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and FIRST NATIONAL FIN, you can compare the effects of market volatilities on Ford and FIRST NATIONAL 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 FIRST NATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and FIRST NATIONAL.
Diversification Opportunities for Ford and FIRST NATIONAL
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and FIRST is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and FIRST NATIONAL FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST NATIONAL FIN 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 FIRST NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST NATIONAL FIN has no effect on the direction of Ford i.e., Ford and FIRST NATIONAL go up and down completely randomly.
Pair Corralation between Ford and FIRST NATIONAL
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.38 times more return on investment than FIRST NATIONAL. However, Ford is 1.38 times more volatile than FIRST NATIONAL FIN. It trades about -0.06 of its potential returns per unit of risk. FIRST NATIONAL FIN is currently generating about -0.18 per unit of risk. If you would invest 990.00 in Ford Motor on January 6, 2025 and sell it today you would lose (32.00) from holding Ford Motor or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. FIRST NATIONAL FIN
Performance |
| Timeline |
| Ford Motor |
| FIRST NATIONAL FIN |
Ford and FIRST NATIONAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and FIRST NATIONAL
The main advantage of trading using opposite Ford and FIRST NATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, FIRST NATIONAL 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 FIRST NATIONAL will offset losses from the drop in FIRST NATIONAL's long position.The idea behind Ford Motor and FIRST NATIONAL FIN 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.| FIRST NATIONAL vs. Mr Cooper Group | FIRST NATIONAL vs. PennyMac Financial Services | FIRST NATIONAL vs. ELLINGTON FINL INC | FIRST NATIONAL vs. LOANDEPOT INC A |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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