Correlation Between Ford and Plug Power
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By analyzing existing cross correlation between Ford Motor and Plug Power, you can compare the effects of market volatilities on Ford and Plug Power 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 Plug Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Plug Power.
Diversification Opportunities for Ford and Plug Power
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Plug is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Plug Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plug Power 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 Plug Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plug Power has no effect on the direction of Ford i.e., Ford and Plug Power go up and down completely randomly.
Pair Corralation between Ford and Plug Power
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.21 times more return on investment than Plug Power. However, Ford Motor is 4.85 times less risky than Plug Power. It trades about 0.09 of its potential returns per unit of risk. Plug Power is currently generating about -0.02 per unit of risk. If you would invest 988.00 in Ford Motor on October 29, 2024 and sell it today you would earn a total of 24.00 from holding Ford Motor or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Ford Motor vs. Plug Power
Performance |
| Timeline |
| Ford Motor |
| Plug Power |
Ford and Plug Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Plug Power
The main advantage of trading using opposite Ford and Plug Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Plug Power 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 Plug Power will offset losses from the drop in Plug Power's long position.The idea behind Ford Motor and Plug Power 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.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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