Correlation Between Ford and SPDR Galaxy
Can any of the company-specific risk be diversified away by investing in both Ford and SPDR Galaxy 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 SPDR Galaxy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and SPDR Galaxy Hedged, you can compare the effects of market volatilities on Ford and SPDR Galaxy 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 SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and SPDR Galaxy.
Diversification Opportunities for Ford and SPDR Galaxy
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and SPDR is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SPDR Galaxy Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Hedged 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 SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Hedged has no effect on the direction of Ford i.e., Ford and SPDR Galaxy go up and down completely randomly.
Pair Corralation between Ford and SPDR Galaxy
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the SPDR Galaxy. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.96 times less risky than SPDR Galaxy. The stock trades about -0.32 of its potential returns per unit of risk. The SPDR Galaxy Hedged is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,662 in SPDR Galaxy Hedged on September 18, 2024 and sell it today you would earn a total of 274.00 from holding SPDR Galaxy Hedged or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. SPDR Galaxy Hedged
Performance |
| Timeline |
| Ford Motor |
| SPDR Galaxy Hedged |
Ford and SPDR Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and SPDR Galaxy
The main advantage of trading using opposite Ford and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, SPDR Galaxy 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 SPDR Galaxy will offset losses from the drop in SPDR Galaxy's long position.The idea behind Ford Motor and SPDR Galaxy Hedged 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.| SPDR Galaxy vs. Freedom Day Dividend | SPDR Galaxy vs. Franklin Templeton ETF | SPDR Galaxy vs. iShares MSCI China | SPDR Galaxy vs. Tidal Trust II |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |