Correlation Between Ford and IShares 1
Can any of the company-specific risk be diversified away by investing in both Ford and IShares 1 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 1 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 1 10Yr Laddered, you can compare the effects of market volatilities on Ford and IShares 1 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 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and IShares 1.
Diversification Opportunities for Ford and IShares 1
Very good diversification
The 3 months correlation between Ford and IShares is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and iShares 1 10Yr Laddered in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 10Yr 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 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 10Yr has no effect on the direction of Ford i.e., Ford and IShares 1 go up and down completely randomly.
Pair Corralation between Ford and IShares 1
Taking into account the 90-day investment horizon Ford Motor is expected to generate 9.61 times more return on investment than IShares 1. However, Ford is 9.61 times more volatile than iShares 1 10Yr Laddered. It trades about 0.06 of its potential returns per unit of risk. iShares 1 10Yr Laddered is currently generating about -0.12 per unit of risk. If you would invest 1,064 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 46.00 from holding Ford Motor or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Ford Motor vs. iShares 1 10Yr Laddered
Performance |
| Timeline |
| Ford Motor |
| iShares 1 10Yr |
Ford and IShares 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and IShares 1
The main advantage of trading using opposite Ford and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, IShares 1 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 1 will offset losses from the drop in IShares 1's long position.The idea behind Ford Motor and iShares 1 10Yr Laddered 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 1 vs. Mackenzie Core Plus | IShares 1 vs. Mackenzie Unconstrained Bond | IShares 1 vs. Mackenzie Floating Rate | IShares 1 vs. Mackenzie Canadian Short |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |