Correlation Between Ford and Vident Core
Can any of the company-specific risk be diversified away by investing in both Ford and Vident Core 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 Vident Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Vident Core Bond, you can compare the effects of market volatilities on Ford and Vident Core 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 Vident Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Vident Core.
Diversification Opportunities for Ford and Vident Core
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Vident is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Vident Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vident Core Bond 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 Vident Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vident Core Bond has no effect on the direction of Ford i.e., Ford and Vident Core go up and down completely randomly.
Pair Corralation between Ford and Vident Core
Taking into account the 90-day investment horizon Ford Motor is expected to generate 6.65 times more return on investment than Vident Core. However, Ford is 6.65 times more volatile than Vident Core Bond. It trades about 0.04 of its potential returns per unit of risk. Vident Core Bond is currently generating about 0.06 per unit of risk. If you would invest 1,122 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Ford Motor or generate 1.6% 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. Vident Core Bond
Performance |
| Timeline |
| Ford Motor |
| Vident Core Bond |
Ford and Vident Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Vident Core
The main advantage of trading using opposite Ford and Vident Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Vident Core 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 Vident Core will offset losses from the drop in Vident Core's long position.The idea behind Ford Motor and Vident Core Bond 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.| Vident Core vs. Vident Core Equity | Vident Core vs. Vident International Equity | Vident Core vs. Invesco Variable Rate | Vident Core vs. FlexShares Credit Scored Corporate |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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