Correlation Between Ford and Cliffwater Corporate
Can any of the company-specific risk be diversified away by investing in both Ford and Cliffwater Corporate 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 Cliffwater Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Cliffwater Corporate Lending, you can compare the effects of market volatilities on Ford and Cliffwater Corporate 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 Cliffwater Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Cliffwater Corporate.
Diversification Opportunities for Ford and Cliffwater Corporate
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Cliffwater is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Cliffwater Corporate Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cliffwater Corporate 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 Cliffwater Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cliffwater Corporate has no effect on the direction of Ford i.e., Ford and Cliffwater Corporate go up and down completely randomly.
Pair Corralation between Ford and Cliffwater Corporate
Taking into account the 90-day investment horizon Ford Motor is expected to generate 40.91 times more return on investment than Cliffwater Corporate. However, Ford is 40.91 times more volatile than Cliffwater Corporate Lending. It trades about 0.03 of its potential returns per unit of risk. Cliffwater Corporate Lending is currently generating about 0.77 per unit of risk. If you would invest 1,083 in Ford Motor on September 2, 2024 and sell it today you would earn a total of 30.00 from holding Ford Motor or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Cliffwater Corporate Lending
Performance |
| Timeline |
| Ford Motor |
| Cliffwater Corporate |
Ford and Cliffwater Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Cliffwater Corporate
The main advantage of trading using opposite Ford and Cliffwater Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Cliffwater Corporate 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 Cliffwater Corporate will offset losses from the drop in Cliffwater Corporate's long position.The idea behind Ford Motor and Cliffwater Corporate Lending 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.| Cliffwater Corporate vs. Maryland Tax Free Bond | Cliffwater Corporate vs. Thrivent Income Fund | Cliffwater Corporate vs. Bbh Intermediate Municipal | Cliffwater Corporate vs. Inflation Protected Bond Fund |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Transaction History View history of all your transactions and understand their impact on performance |