Correlation Between Ford and Ishares Us
Can any of the company-specific risk be diversified away by investing in both Ford and Ishares Us 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 Ishares Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ishares Aggregate Bond, you can compare the effects of market volatilities on Ford and Ishares Us 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 Ishares Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ishares Us.
Diversification Opportunities for Ford and Ishares Us
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Ishares is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ishares Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Aggregate Bond 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 Ishares Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Aggregate Bond has no effect on the direction of Ford i.e., Ford and Ishares Us go up and down completely randomly.
Pair Corralation between Ford and Ishares Us
Taking into account the 90-day investment horizon Ford Motor is expected to generate 5.48 times more return on investment than Ishares Us. However, Ford is 5.48 times more volatile than Ishares Aggregate Bond. It trades about 0.01 of its potential returns per unit of risk. Ishares Aggregate Bond is currently generating about 0.03 per unit of risk. If you would invest 1,140 in Ford Motor on September 4, 2024 and sell it today you would lose (58.00) from holding Ford Motor or give up 5.09% 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. Ishares Aggregate Bond
Performance |
| Timeline |
| Ford Motor |
| Ishares Aggregate Bond |
Ford and Ishares Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ishares Us
The main advantage of trading using opposite Ford and Ishares Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ishares Us 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 Ishares Us will offset losses from the drop in Ishares Us' long position.The idea behind Ford Motor and Ishares Aggregate Bond 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.| Ishares Us vs. Materials Portfolio Fidelity | Ishares Us vs. Fabxx | Ishares Us vs. Falcon Focus Scv | Ishares Us vs. Abr 7525 Volatility |
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 Stocks Directory module to find actively traded stocks across global markets.
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