Correlation Between Ford and IShares Evolved
Can any of the company-specific risk be diversified away by investing in both Ford and IShares Evolved 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 IShares Evolved into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and iShares Evolved Discretionary, you can compare the effects of market volatilities on Ford and IShares Evolved 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 IShares Evolved. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and IShares Evolved.
Diversification Opportunities for Ford and IShares Evolved
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and IShares is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and iShares Evolved Discretionary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Evolved Disc 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 IShares Evolved. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Evolved Disc has no effect on the direction of Ford i.e., Ford and IShares Evolved go up and down completely randomly.
Pair Corralation between Ford and IShares Evolved
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the IShares Evolved. In addition to that, Ford is 2.76 times more volatile than iShares Evolved Discretionary. It trades about 0.0 of its total potential returns per unit of risk. iShares Evolved Discretionary is currently generating about 0.13 per unit of volatility. If you would invest 3,799 in iShares Evolved Discretionary on August 31, 2024 and sell it today you would earn a total of 1,786 from holding iShares Evolved Discretionary or generate 47.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. iShares Evolved Discretionary
Performance |
| Timeline |
| Ford Motor |
| iShares Evolved Disc |
Ford and IShares Evolved Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and IShares Evolved
The main advantage of trading using opposite Ford and IShares Evolved positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, IShares Evolved 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 IShares Evolved will offset losses from the drop in IShares Evolved's long position.The idea behind Ford Motor and iShares Evolved Discretionary 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.| IShares Evolved vs. iShares Evolved Technology | IShares Evolved vs. iShares Global Consumer | IShares Evolved vs. iShares ESG Aware | IShares Evolved vs. iShares Currency Hedged |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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