Correlation Between Ford and Navigator Equity
Can any of the company-specific risk be diversified away by investing in both Ford and Navigator Equity 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 Navigator Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Navigator Equity Hedged, you can compare the effects of market volatilities on Ford and Navigator Equity 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 Navigator Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Navigator Equity.
Diversification Opportunities for Ford and Navigator Equity
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Navigator is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Navigator Equity Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navigator Equity Hedged 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 Navigator Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navigator Equity Hedged has no effect on the direction of Ford i.e., Ford and Navigator Equity go up and down completely randomly.
Pair Corralation between Ford and Navigator Equity
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.53 times more return on investment than Navigator Equity. However, Ford is 2.53 times more volatile than Navigator Equity Hedged. It trades about -0.01 of its potential returns per unit of risk. Navigator Equity Hedged is currently generating about -0.16 per unit of risk. If you would invest 1,200 in Ford Motor on September 3, 2024 and sell it today you would lose (87.00) from holding Ford Motor or give up 7.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 26.03% |
| Values | Daily Returns |
Ford Motor vs. Navigator Equity Hedged
Performance |
| Timeline |
| Ford Motor |
| Navigator Equity Hedged |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Navigator Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Navigator Equity
The main advantage of trading using opposite Ford and Navigator Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Navigator Equity 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 Navigator Equity will offset losses from the drop in Navigator Equity's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Navigator Equity vs. Neuberger Berman Long | Navigator Equity vs. Diamond Hill Long Short | Navigator Equity vs. Diamond Hill Long Short |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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