Correlation Between Ford and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both Ford and SPDR MSCI 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 SPDR MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and SPDR MSCI World, you can compare the effects of market volatilities on Ford and SPDR MSCI 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 SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and SPDR MSCI.
Diversification Opportunities for Ford and SPDR MSCI
Weak diversification
The 3 months correlation between Ford and SPDR is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SPDR MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI World 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 SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI World has no effect on the direction of Ford i.e., Ford and SPDR MSCI go up and down completely randomly.
Pair Corralation between Ford and SPDR MSCI
Taking into account the 90-day investment horizon Ford is expected to generate 1.09 times less return on investment than SPDR MSCI. In addition to that, Ford is 3.89 times more volatile than SPDR MSCI World. It trades about 0.03 of its total potential returns per unit of risk. SPDR MSCI World is currently generating about 0.14 per unit of volatility. If you would invest 10,469 in SPDR MSCI World on August 25, 2024 and sell it today you would earn a total of 2,375 from holding SPDR MSCI World or generate 22.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. SPDR MSCI World
Performance |
| Timeline |
| Ford Motor |
| SPDR MSCI World |
Ford and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and SPDR MSCI
The main advantage of trading using opposite Ford and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, SPDR MSCI 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 SPDR MSCI will offset losses from the drop in SPDR MSCI's long position.The idea behind Ford Motor and SPDR MSCI World 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.| SPDR MSCI vs. iShares MSCI Emerging | SPDR MSCI vs. BMO Long Federal | SPDR MSCI vs. iShares MSCI EAFE | SPDR MSCI vs. Vanguard Total Market |
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.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |