Correlation Between Ford and Northern Fixed
Can any of the company-specific risk be diversified away by investing in both Ford and Northern Fixed 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 Northern Fixed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Northern Fixed Income, you can compare the effects of market volatilities on Ford and Northern Fixed 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 Northern Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Northern Fixed.
Diversification Opportunities for Ford and Northern Fixed
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Northern is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Northern Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Fixed Income 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 Northern Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Fixed Income has no effect on the direction of Ford i.e., Ford and Northern Fixed go up and down completely randomly.
Pair Corralation between Ford and Northern Fixed
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Northern Fixed. In addition to that, Ford is 7.8 times more volatile than Northern Fixed Income. It trades about 0.0 of its total potential returns per unit of risk. Northern Fixed Income is currently generating about 0.03 per unit of volatility. If you would invest 890.00 in Northern Fixed Income on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Northern Fixed Income or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Northern Fixed Income
Performance |
| Timeline |
| Ford Motor |
| Northern Fixed Income |
Ford and Northern Fixed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Northern Fixed
The main advantage of trading using opposite Ford and Northern Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Northern Fixed 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 Northern Fixed will offset losses from the drop in Northern Fixed's long position.The idea behind Ford Motor and Northern Fixed Income 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.| Northern Fixed vs. Volumetric Fund Volumetric | Northern Fixed vs. Growth Fund Of | Northern Fixed vs. Versatile Bond Portfolio | Northern Fixed vs. Small Cap Stock |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |