Correlation Between Ford and IPower
Can any of the company-specific risk be diversified away by investing in both Ford and IPower 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 IPower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and iPower Inc, you can compare the effects of market volatilities on Ford and IPower 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 IPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and IPower.
Diversification Opportunities for Ford and IPower
Very good diversification
The 3 months correlation between Ford and IPower is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and iPower Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iPower Inc 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 IPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iPower Inc has no effect on the direction of Ford i.e., Ford and IPower go up and down completely randomly.
Pair Corralation between Ford and IPower
Taking into account the 90-day investment horizon Ford is expected to generate 21.69 times less return on investment than IPower. But when comparing it to its historical volatility, Ford Motor is 4.54 times less risky than IPower. It trades about 0.01 of its potential returns per unit of risk. iPower Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 84.00 in iPower Inc on August 27, 2024 and sell it today you would lose (14.00) from holding iPower Inc or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. iPower Inc
Performance |
| Timeline |
| Ford Motor |
| iPower Inc |
Ford and IPower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and IPower
The main advantage of trading using opposite Ford and IPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, IPower 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 IPower will offset losses from the drop in IPower's long position.The idea behind Ford Motor and iPower Inc 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.| IPower vs. Hour Loop | IPower vs. Qurate Retail Series | IPower vs. MOGU Inc | IPower vs. Meiwu Technology Co |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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