Correlation Between Ford and PHINIA
Can any of the company-specific risk be diversified away by investing in both Ford and PHINIA 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 PHINIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and PHINIA Inc, you can compare the effects of market volatilities on Ford and PHINIA 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 PHINIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and PHINIA.
Diversification Opportunities for Ford and PHINIA
Poor diversification
The 3 months correlation between Ford and PHINIA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PHINIA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHINIA Inc 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 PHINIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHINIA Inc has no effect on the direction of Ford i.e., Ford and PHINIA go up and down completely randomly.
Pair Corralation between Ford and PHINIA
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the PHINIA. In addition to that, Ford is 1.1 times more volatile than PHINIA Inc. It trades about 0.0 of its total potential returns per unit of risk. PHINIA Inc is currently generating about 0.1 per unit of volatility. If you would invest 4,298 in PHINIA Inc on September 2, 2024 and sell it today you would earn a total of 1,310 from holding PHINIA Inc or generate 30.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. PHINIA Inc
Performance |
| Timeline |
| Ford Motor |
| PHINIA Inc |
Ford and PHINIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and PHINIA
The main advantage of trading using opposite Ford and PHINIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, PHINIA 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 PHINIA will offset losses from the drop in PHINIA's long position.The idea behind Ford Motor and PHINIA Inc 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.| PHINIA vs. Merit Medical Systems | PHINIA vs. Artisan Partners Asset | PHINIA vs. Freedom Holding Corp | PHINIA vs. Citizens Bancorp Investment |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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