Correlation Between Ford and H-D International
Can any of the company-specific risk be diversified away by investing in both Ford and H-D International 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 H-D International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and H D International Holdings, you can compare the effects of market volatilities on Ford and H-D International 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 H-D International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and H-D International.
Diversification Opportunities for Ford and H-D International
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and H-D is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and H D International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H D International 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 H-D International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H D International has no effect on the direction of Ford i.e., Ford and H-D International go up and down completely randomly.
Pair Corralation between Ford and H-D International
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the H-D International. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.11 times less risky than H-D International. The stock trades about 0.0 of its potential returns per unit of risk. The H D International Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 0.02 in H D International Holdings on September 3, 2024 and sell it today you would earn a total of 0.00 from holding H D International Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Ford Motor vs. H D International Holdings
Performance |
| Timeline |
| Ford Motor |
| H D International |
Ford and H-D International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and H-D International
The main advantage of trading using opposite Ford and H-D International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, H-D International 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 H-D International will offset losses from the drop in H-D International's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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