Correlation Between Ford and Maine Municipal
Can any of the company-specific risk be diversified away by investing in both Ford and Maine Municipal 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 Maine Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Maine Municipal Fund, you can compare the effects of market volatilities on Ford and Maine Municipal 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 Maine Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Maine Municipal.
Diversification Opportunities for Ford and Maine Municipal
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Maine is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Maine Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maine 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 Maine Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maine Municipal has no effect on the direction of Ford i.e., Ford and Maine Municipal go up and down completely randomly.
Pair Corralation between Ford and Maine Municipal
Taking into account the 90-day investment horizon Ford Motor is expected to generate 6.26 times more return on investment than Maine Municipal. However, Ford is 6.26 times more volatile than Maine Municipal Fund. It trades about 0.22 of its potential returns per unit of risk. Maine Municipal Fund is currently generating about 0.23 per unit of risk. If you would invest 1,022 in Ford Motor on September 3, 2024 and sell it today you would earn a total of 91.00 from holding Ford Motor or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Maine Municipal Fund
Performance |
| Timeline |
| Ford Motor |
| Maine Municipal |
Ford and Maine Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Maine Municipal
The main advantage of trading using opposite Ford and Maine Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Maine Municipal 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 Maine Municipal will offset losses from the drop in Maine Municipal's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Maine Municipal vs. Calvert High Yield | Maine Municipal vs. Pgim High Yield | Maine Municipal vs. Lord Abbett High | Maine Municipal vs. Prudential High Yield |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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