Correlation Between Ford and Trinity Capital
Can any of the company-specific risk be diversified away by investing in both Ford and Trinity Capital 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 Trinity Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Trinity Capital, you can compare the effects of market volatilities on Ford and Trinity Capital 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 Trinity Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Trinity Capital.
Diversification Opportunities for Ford and Trinity Capital
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Trinity is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Trinity Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Capital 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 Trinity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Capital has no effect on the direction of Ford i.e., Ford and Trinity Capital go up and down completely randomly.
Pair Corralation between Ford and Trinity Capital
Taking into account the 90-day investment horizon Ford is expected to generate 1.21 times less return on investment than Trinity Capital. In addition to that, Ford is 1.84 times more volatile than Trinity Capital. It trades about 0.04 of its total potential returns per unit of risk. Trinity Capital is currently generating about 0.09 per unit of volatility. If you would invest 1,388 in Trinity Capital on August 27, 2024 and sell it today you would earn a total of 37.00 from holding Trinity Capital or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Trinity Capital
Performance |
| Timeline |
| Ford Motor |
| Trinity Capital |
Ford and Trinity Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Trinity Capital
The main advantage of trading using opposite Ford and Trinity Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Trinity Capital 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 Trinity Capital will offset losses from the drop in Trinity Capital's long position.The idea behind Ford Motor and Trinity Capital 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.| Trinity Capital vs. PowerUp Acquisition Corp | Trinity Capital vs. Aurora Innovation | Trinity Capital vs. HUMANA INC | Trinity Capital vs. Aquagold International |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |