Correlation Between Ford and High Yield
Can any of the company-specific risk be diversified away by investing in both Ford and High Yield 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 High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and High Yield Fund, you can compare the effects of market volatilities on Ford and High Yield 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 High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and High Yield.
Diversification Opportunities for Ford and High Yield
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and High is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund 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 High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Ford i.e., Ford and High Yield go up and down completely randomly.
Pair Corralation between Ford and High Yield
Taking into account the 90-day investment horizon Ford Motor is expected to generate 12.04 times more return on investment than High Yield. However, Ford is 12.04 times more volatile than High Yield Fund. It trades about 0.17 of its potential returns per unit of risk. High Yield Fund is currently generating about 0.17 per unit of risk. If you would invest 1,033 in Ford Motor on August 31, 2024 and sell it today you would earn a total of 77.00 from holding Ford Motor or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. High Yield Fund
Performance |
| Timeline |
| Ford Motor |
| High Yield Fund |
Ford and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and High Yield
The main advantage of trading using opposite Ford and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.The idea behind Ford Motor and High Yield Fund 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.| High Yield vs. Vanguard High Yield Corporate | High Yield vs. Vanguard High Yield Porate | High Yield vs. Blackrock Hi Yld | High Yield vs. Blackrock High Yield |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |