Correlation Between Ford and NEXTERA
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By analyzing existing cross correlation between Ford Motor and NEXTERA ENERGY CAPITAL, you can compare the effects of market volatilities on Ford and NEXTERA 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 NEXTERA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and NEXTERA.
Diversification Opportunities for Ford and NEXTERA
Very good diversification
The 3 months correlation between Ford and NEXTERA is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and NEXTERA ENERGY CAPITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXTERA ENERGY 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 NEXTERA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXTERA ENERGY CAPITAL has no effect on the direction of Ford i.e., Ford and NEXTERA go up and down completely randomly.
Pair Corralation between Ford and NEXTERA
Taking into account the 90-day investment horizon Ford Motor is expected to generate 3.94 times more return on investment than NEXTERA. However, Ford is 3.94 times more volatile than NEXTERA ENERGY CAPITAL. It trades about 0.01 of its potential returns per unit of risk. NEXTERA ENERGY CAPITAL is currently generating about -0.34 per unit of risk. If you would invest 1,122 in Ford Motor on August 27, 2024 and sell it today you would lose (4.00) from holding Ford Motor or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. NEXTERA ENERGY CAPITAL
Performance |
| Timeline |
| Ford Motor |
| NEXTERA ENERGY CAPITAL |
Ford and NEXTERA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and NEXTERA
The main advantage of trading using opposite Ford and NEXTERA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, NEXTERA 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 NEXTERA will offset losses from the drop in NEXTERA's long position.The idea behind Ford Motor and NEXTERA ENERGY 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.| NEXTERA vs. AEP TEX INC | NEXTERA vs. US BANK NATIONAL | NEXTERA vs. Dupont De Nemours | NEXTERA vs. The Travelers Companies |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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