Correlation Between Ford and Loop Energy
Can any of the company-specific risk be diversified away by investing in both Ford and Loop Energy 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 Loop Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Loop Energy, you can compare the effects of market volatilities on Ford and Loop Energy 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 Loop Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Loop Energy.
Diversification Opportunities for Ford and Loop Energy
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Loop is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Loop Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Energy 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 Loop Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loop Energy has no effect on the direction of Ford i.e., Ford and Loop Energy go up and down completely randomly.
Pair Corralation between Ford and Loop Energy
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Loop Energy. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 21.19 times less risky than Loop Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Loop Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Loop Energy on August 28, 2024 and sell it today you would lose (26.00) from holding Loop Energy or give up 76.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Ford Motor vs. Loop Energy
Performance |
| Timeline |
| Ford Motor |
| Loop Energy |
Ford and Loop Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Loop Energy
The main advantage of trading using opposite Ford and Loop Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Loop Energy 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 Loop Energy will offset losses from the drop in Loop Energy's long position.The idea behind Ford Motor and Loop Energy 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.| Loop Energy vs. FREYR Battery SA | Loop Energy vs. nVent Electric PLC | Loop Energy vs. Hubbell | Loop Energy vs. Advanced Energy Industries |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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