Correlation Between Ford and Hyundai
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By analyzing existing cross correlation between Ford Motor and Hyundai Capital America, you can compare the effects of market volatilities on Ford and Hyundai 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 Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Hyundai.
Diversification Opportunities for Ford and Hyundai
Significant diversification
The 3 months correlation between Ford and Hyundai is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Hyundai Capital America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Capital America 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 Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Capital America has no effect on the direction of Ford i.e., Ford and Hyundai go up and down completely randomly.
Pair Corralation between Ford and Hyundai
Taking into account the 90-day investment horizon Ford Motor is expected to generate 4.88 times more return on investment than Hyundai. However, Ford is 4.88 times more volatile than Hyundai Capital America. It trades about 0.01 of its potential returns per unit of risk. Hyundai Capital America is currently generating about 0.0 per unit of risk. If you would invest 1,138 in Ford Motor on September 1, 2024 and sell it today you would lose (25.00) from holding Ford Motor or give up 2.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 35.35% |
| Values | Daily Returns |
Ford Motor vs. Hyundai Capital America
Performance |
| Timeline |
| Ford Motor |
| Hyundai Capital America |
Ford and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Hyundai
The main advantage of trading using opposite Ford and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Hyundai 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 Hyundai will offset losses from the drop in Hyundai's long position.The idea behind Ford Motor and Hyundai Capital America 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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