Correlation Between Ford and VanEck International
Can any of the company-specific risk be diversified away by investing in both Ford and VanEck International 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 International 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 International High, you can compare the effects of market volatilities on Ford and VanEck International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and VanEck International.
Diversification Opportunities for Ford and VanEck International
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and VanEck is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and VanEck International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck International High 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck International High has no effect on the direction of Ford i.e., Ford and VanEck International go up and down completely randomly.
Pair Corralation between Ford and VanEck International
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the VanEck International. In addition to that, Ford is 5.75 times more volatile than VanEck International High. It trades about -0.01 of its total potential returns per unit of risk. VanEck International High is currently generating about 0.09 per unit of volatility. If you would invest 1,839 in VanEck International High on August 28, 2024 and sell it today you would earn a total of 242.00 from holding VanEck International High or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. VanEck International High
Performance |
| Timeline |
| Ford Motor |
| VanEck International High |
Ford and VanEck International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and VanEck International
The main advantage of trading using opposite Ford and VanEck International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, VanEck International 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 International will offset losses from the drop in VanEck International's long position.The idea behind Ford Motor and VanEck International High 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 International vs. VanEck Emerging Markets | VanEck International vs. iShares International High | VanEck International vs. iShares Intl High | VanEck International vs. iShares JP Morgan |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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