Correlation Between Ford and VanEck Hydrogen
Can any of the company-specific risk be diversified away by investing in both Ford and VanEck Hydrogen 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 VanEck Hydrogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and VanEck Hydrogen Economy, you can compare the effects of market volatilities on Ford and VanEck Hydrogen 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 VanEck Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and VanEck Hydrogen.
Diversification Opportunities for Ford and VanEck Hydrogen
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and VanEck is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and VanEck Hydrogen Economy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Hydrogen Economy 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 VanEck Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Hydrogen Economy has no effect on the direction of Ford i.e., Ford and VanEck Hydrogen go up and down completely randomly.
Pair Corralation between Ford and VanEck Hydrogen
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.04 times more return on investment than VanEck Hydrogen. However, Ford is 1.04 times more volatile than VanEck Hydrogen Economy. It trades about 0.01 of its potential returns per unit of risk. VanEck Hydrogen Economy is currently generating about -0.04 per unit of risk. If you would invest 1,080 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 30.00 from holding Ford Motor or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.75% |
| Values | Daily Returns |
Ford Motor vs. VanEck Hydrogen Economy
Performance |
| Timeline |
| Ford Motor |
| VanEck Hydrogen Economy |
Ford and VanEck Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and VanEck Hydrogen
The main advantage of trading using opposite Ford and VanEck Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, VanEck Hydrogen 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 VanEck Hydrogen will offset losses from the drop in VanEck Hydrogen's long position.The idea behind Ford Motor and VanEck Hydrogen Economy 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.| VanEck Hydrogen vs. Vanguard FTSE Developed | VanEck Hydrogen vs. Leverage Shares 2x | VanEck Hydrogen vs. Amundi Index Solutions | VanEck Hydrogen vs. Amundi Index Solutions |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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