Correlation Between Workhorse and Ford
Can any of the company-specific risk be diversified away by investing in both Workhorse and Ford 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 Workhorse and Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workhorse Group and Ford Motor, you can compare the effects of market volatilities on Workhorse and Ford 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 Workhorse with a short position of Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workhorse and Ford.
Diversification Opportunities for Workhorse and Ford
Very weak diversification
The 3 months correlation between Workhorse and Ford is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Workhorse Group and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Workhorse 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 Workhorse Group are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Workhorse i.e., Workhorse and Ford go up and down completely randomly.
Pair Corralation between Workhorse and Ford
Given the investment horizon of 90 days Workhorse Group is expected to under-perform the Ford. In addition to that, Workhorse is 3.34 times more volatile than Ford Motor. It trades about -0.07 of its total potential returns per unit of risk. Ford Motor is currently generating about 0.02 per unit of volatility. If you would invest 1,029 in Ford Motor on September 3, 2024 and sell it today you would earn a total of 69.00 from holding Ford Motor or generate 6.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Workhorse Group vs. Ford Motor
Performance |
| Timeline |
| Workhorse Group |
| Ford Motor |
Workhorse and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workhorse and Ford
The main advantage of trading using opposite Workhorse and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workhorse position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| Workhorse vs. Faraday Future Intelligent | Workhorse vs. Mullen Automotive | Workhorse vs. Xpeng Inc | Workhorse vs. Nio Class A |
| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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