Correlation Between Ford and Luminar Technologies
Can any of the company-specific risk be diversified away by investing in both Ford and Luminar Technologies 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 Luminar Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Luminar Technologies, you can compare the effects of market volatilities on Ford and Luminar Technologies 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 Luminar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Luminar Technologies.
Diversification Opportunities for Ford and Luminar Technologies
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Luminar is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies 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 Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Ford i.e., Ford and Luminar Technologies go up and down completely randomly.
Pair Corralation between Ford and Luminar Technologies
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.35 times more return on investment than Luminar Technologies. However, Ford Motor is 2.86 times less risky than Luminar Technologies. It trades about -0.01 of its potential returns per unit of risk. Luminar Technologies is currently generating about -0.03 per unit of risk. If you would invest 1,096 in Ford Motor on August 23, 2024 and sell it today you would lose (16.00) from holding Ford Motor or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Luminar Technologies
Performance |
| Timeline |
| Ford Motor |
| Luminar Technologies |
Ford and Luminar Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Luminar Technologies
The main advantage of trading using opposite Ford and Luminar Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Luminar Technologies 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 Luminar Technologies will offset losses from the drop in Luminar Technologies' long position.The idea behind Ford Motor and Luminar Technologies 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.| Luminar Technologies vs. Mobileye Global Class | Luminar Technologies vs. Hyliion Holdings Corp | Luminar Technologies vs. Aeva Technologies | Luminar Technologies vs. Innoviz Technologies |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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