Correlation Between Ford and SPDR Nuveen
Can any of the company-specific risk be diversified away by investing in both Ford and SPDR Nuveen 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 SPDR Nuveen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and SPDR Nuveen Municipal, you can compare the effects of market volatilities on Ford and SPDR Nuveen 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 SPDR Nuveen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and SPDR Nuveen.
Diversification Opportunities for Ford and SPDR Nuveen
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and SPDR is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SPDR Nuveen Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Nuveen Municipal 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 SPDR Nuveen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Nuveen Municipal has no effect on the direction of Ford i.e., Ford and SPDR Nuveen go up and down completely randomly.
Pair Corralation between Ford and SPDR Nuveen
Taking into account the 90-day investment horizon Ford Motor is expected to generate 7.97 times more return on investment than SPDR Nuveen. However, Ford is 7.97 times more volatile than SPDR Nuveen Municipal. It trades about 0.05 of its potential returns per unit of risk. SPDR Nuveen Municipal is currently generating about -0.05 per unit of risk. If you would invest 1,002 in Ford Motor on October 25, 2024 and sell it today you would earn a total of 14.00 from holding Ford Motor or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. SPDR Nuveen Municipal
Performance |
| Timeline |
| Ford Motor |
| SPDR Nuveen Municipal |
Ford and SPDR Nuveen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and SPDR Nuveen
The main advantage of trading using opposite Ford and SPDR Nuveen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, SPDR Nuveen 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 SPDR Nuveen will offset losses from the drop in SPDR Nuveen's long position.The idea behind Ford Motor and SPDR Nuveen Municipal 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.| SPDR Nuveen vs. Mountain Commerce Bancorp | SPDR Nuveen vs. Magyar Bancorp | SPDR Nuveen vs. Nortech Systems Incorporated | SPDR Nuveen vs. Aquagold International |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |