Correlation Between Ford and VanEck Vectors
Can any of the company-specific risk be diversified away by investing in both Ford and VanEck Vectors 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 VanEck Vectors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and VanEck Vectors Small, you can compare the effects of market volatilities on Ford and VanEck Vectors 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 VanEck Vectors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and VanEck Vectors.
Diversification Opportunities for Ford and VanEck Vectors
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and VanEck is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and VanEck Vectors Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors Small 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 VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors Small has no effect on the direction of Ford i.e., Ford and VanEck Vectors go up and down completely randomly.
Pair Corralation between Ford and VanEck Vectors
Taking into account the 90-day investment horizon Ford is expected to generate 1.2 times less return on investment than VanEck Vectors. In addition to that, Ford is 2.62 times more volatile than VanEck Vectors Small. It trades about 0.01 of its total potential returns per unit of risk. VanEck Vectors Small is currently generating about 0.04 per unit of volatility. If you would invest 1,732 in VanEck Vectors Small on August 30, 2024 and sell it today you would earn a total of 255.00 from holding VanEck Vectors Small or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Ford Motor vs. VanEck Vectors Small
Performance |
| Timeline |
| Ford Motor |
| VanEck Vectors Small |
Ford and VanEck Vectors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and VanEck Vectors
The main advantage of trading using opposite Ford and VanEck Vectors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, VanEck Vectors 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 VanEck Vectors will offset losses from the drop in VanEck Vectors' long position.The idea behind Ford Motor and VanEck Vectors Small 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.| VanEck Vectors vs. SPDR SP 500 | VanEck Vectors vs. Vanguard Total Market | VanEck Vectors vs. iShares Core SP | VanEck Vectors vs. iShares Core SP |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |