Correlation Between Ford and NN Group
Can any of the company-specific risk be diversified away by investing in both Ford and NN Group 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 NN Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and NN Group NV, you can compare the effects of market volatilities on Ford and NN Group 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 NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and NN Group.
Diversification Opportunities for Ford and NN Group
Very weak diversification
The 3 months correlation between Ford and NNGPF is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV 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 NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Ford i.e., Ford and NN Group go up and down completely randomly.
Pair Corralation between Ford and NN Group
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the NN Group. In addition to that, Ford is 1.56 times more volatile than NN Group NV. It trades about -0.01 of its total potential returns per unit of risk. NN Group NV is currently generating about 0.31 per unit of volatility. If you would invest 4,494 in NN Group NV on January 5, 2025 and sell it today you would earn a total of 1,011 from holding NN Group NV or generate 22.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Ford Motor vs. NN Group NV
Performance |
| Timeline |
| Ford Motor |
| NN Group NV |
Ford and NN Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and NN Group
The main advantage of trading using opposite Ford and NN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, NN Group 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 NN Group will offset losses from the drop in NN Group's long position.The idea behind Ford Motor and NN Group NV 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.| NN Group vs. NN Group NV | NN Group vs. Swiss Life Holding | NN Group vs. PICC Property and | NN Group vs. AXA SA |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |