Correlation Between Ford and Wheels Up
Can any of the company-specific risk be diversified away by investing in both Ford and Wheels Up 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 Wheels Up into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Wheels Up Experience, you can compare the effects of market volatilities on Ford and Wheels Up 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 Wheels Up. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Wheels Up.
Diversification Opportunities for Ford and Wheels Up
Good diversification
The 3 months correlation between Ford and Wheels is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Wheels Up Experience in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheels Up Experience 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 Wheels Up. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheels Up Experience has no effect on the direction of Ford i.e., Ford and Wheels Up go up and down completely randomly.
Pair Corralation between Ford and Wheels Up
Taking into account the 90-day investment horizon Ford is expected to generate 8.36 times less return on investment than Wheels Up. But when comparing it to its historical volatility, Ford Motor is 2.11 times less risky than Wheels Up. It trades about 0.04 of its potential returns per unit of risk. Wheels Up Experience is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 223.00 in Wheels Up Experience on August 27, 2024 and sell it today you would earn a total of 40.00 from holding Wheels Up Experience or generate 17.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Wheels Up Experience
Performance |
| Timeline |
| Ford Motor |
| Wheels Up Experience |
Ford and Wheels Up Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Wheels Up
The main advantage of trading using opposite Ford and Wheels Up positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Wheels Up 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 Wheels Up will offset losses from the drop in Wheels Up's long position.The idea behind Ford Motor and Wheels Up Experience 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.| Wheels Up vs. Blade Air Mobility | Wheels Up vs. Clear Secure | Wheels Up vs. Archer Aviation | Wheels Up vs. Beauty Health Co |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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