Correlation Between Ford and NewHold Investment
Can any of the company-specific risk be diversified away by investing in both Ford and NewHold Investment 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 NewHold Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and NewHold Investment Corp, you can compare the effects of market volatilities on Ford and NewHold Investment 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 NewHold Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and NewHold Investment.
Diversification Opportunities for Ford and NewHold Investment
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and NewHold is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and NewHold Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewHold Investment Corp 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 NewHold Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewHold Investment Corp has no effect on the direction of Ford i.e., Ford and NewHold Investment go up and down completely randomly.
Pair Corralation between Ford and NewHold Investment
If you would invest 1,113 in Ford Motor on August 29, 2024 and sell it today you would lose (3.00) from holding Ford Motor or give up 0.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 0.32% |
| Values | Daily Returns |
Ford Motor vs. NewHold Investment Corp
Performance |
| Timeline |
| Ford Motor |
| NewHold Investment Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and NewHold Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and NewHold Investment
The main advantage of trading using opposite Ford and NewHold Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, NewHold Investment 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 NewHold Investment will offset losses from the drop in NewHold Investment's long position.The idea behind Ford Motor and NewHold Investment Corp 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.| NewHold Investment vs. Royalty Management Holding | NewHold Investment vs. PennantPark Floating Rate | NewHold Investment vs. Kaltura | NewHold Investment vs. Data3 Limited |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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