Correlation Between Ford and Hyliion Holdings
Can any of the company-specific risk be diversified away by investing in both Ford and Hyliion Holdings 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 Hyliion Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Hyliion Holdings Corp, you can compare the effects of market volatilities on Ford and Hyliion Holdings 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 Hyliion Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Hyliion Holdings.
Diversification Opportunities for Ford and Hyliion Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Hyliion is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hyliion Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyliion Holdings Corp 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 Hyliion Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyliion Holdings Corp has no effect on the direction of Ford i.e., Ford and Hyliion Holdings go up and down completely randomly.
Pair Corralation between Ford and Hyliion Holdings
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.35 times more return on investment than Hyliion Holdings. However, Ford Motor is 2.89 times less risky than Hyliion Holdings. It trades about -0.14 of its potential returns per unit of risk. Hyliion Holdings Corp is currently generating about -0.06 per unit of risk. If you would invest 1,121 in Ford Motor on November 18, 2024 and sell it today you would lose (173.00) from holding Ford Motor or give up 15.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Hyliion Holdings Corp
Performance |
| Timeline |
| Ford Motor |
| Hyliion Holdings Corp |
Ford and Hyliion Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Hyliion Holdings
The main advantage of trading using opposite Ford and Hyliion Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Hyliion Holdings 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 Hyliion Holdings will offset losses from the drop in Hyliion Holdings' long position.The idea behind Ford Motor and Hyliion Holdings Corp 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.| Hyliion Holdings vs. Quantumscape Corp | Hyliion Holdings vs. Mobileye Global Class | Hyliion Holdings vs. Innoviz Technologies | Hyliion Holdings vs. Aeva Technologies, Common |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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