Correlation Between Ford and Hyzon Motors
Can any of the company-specific risk be diversified away by investing in both Ford and Hyzon Motors 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 Hyzon Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Hyzon Motors, you can compare the effects of market volatilities on Ford and Hyzon Motors 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 Hyzon Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Hyzon Motors.
Diversification Opportunities for Ford and Hyzon Motors
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Hyzon is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hyzon Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyzon Motors 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 Hyzon Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyzon Motors has no effect on the direction of Ford i.e., Ford and Hyzon Motors go up and down completely randomly.
Pair Corralation between Ford and Hyzon Motors
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.31 times more return on investment than Hyzon Motors. However, Ford Motor is 3.28 times less risky than Hyzon Motors. It trades about 0.06 of its potential returns per unit of risk. Hyzon Motors is currently generating about -0.11 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 | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Hyzon Motors
Performance |
| Timeline |
| Ford Motor |
| Hyzon Motors |
Ford and Hyzon Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Hyzon Motors
The main advantage of trading using opposite Ford and Hyzon Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Hyzon Motors 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 Hyzon Motors will offset losses from the drop in Hyzon Motors' long position.The idea behind Ford Motor and Hyzon Motors 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.| Hyzon Motors vs. Mullen Automotive | Hyzon Motors vs. Canoo Inc | Hyzon Motors vs. Faraday Future Intelligent | Hyzon Motors vs. Polestar Automotive Holding |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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