Correlation Between Ford and Inflation Protection
Can any of the company-specific risk be diversified away by investing in both Ford and Inflation Protection 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 Inflation Protection into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Inflation Protection Fund, you can compare the effects of market volatilities on Ford and Inflation Protection 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 Inflation Protection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Inflation Protection.
Diversification Opportunities for Ford and Inflation Protection
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Inflation is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Inflation Protection Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protection 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 Inflation Protection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protection has no effect on the direction of Ford i.e., Ford and Inflation Protection go up and down completely randomly.
Pair Corralation between Ford and Inflation Protection
Taking into account the 90-day investment horizon Ford Motor is expected to generate 6.88 times more return on investment than Inflation Protection. However, Ford is 6.88 times more volatile than Inflation Protection Fund. It trades about 0.22 of its potential returns per unit of risk. Inflation Protection Fund is currently generating about 0.14 per unit of risk. If you would invest 1,022 in Ford Motor on September 3, 2024 and sell it today you would earn a total of 91.00 from holding Ford Motor or generate 8.9% 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. Inflation Protection Fund
Performance |
| Timeline |
| Ford Motor |
| Inflation Protection |
Ford and Inflation Protection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Inflation Protection
The main advantage of trading using opposite Ford and Inflation Protection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Inflation Protection 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 Inflation Protection will offset losses from the drop in Inflation Protection's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Inflation Protection vs. Jpmorgan Emerging Markets | Inflation Protection vs. Templeton Developing Markets | Inflation Protection vs. Rbc Emerging Markets | Inflation Protection vs. Locorr Market Trend |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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