Correlation Between Worksport and Ford
Can any of the company-specific risk be diversified away by investing in both Worksport 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 Worksport and Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worksport and Ford Motor, you can compare the effects of market volatilities on Worksport 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 Worksport with a short position of Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worksport and Ford.
Diversification Opportunities for Worksport and Ford
Weak diversification
The 3 months correlation between Worksport and Ford is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Worksport and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Worksport 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 Worksport 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 Worksport i.e., Worksport and Ford go up and down completely randomly.
Pair Corralation between Worksport and Ford
Given the investment horizon of 90 days Worksport is expected to under-perform the Ford. In addition to that, Worksport is 3.91 times more volatile than Ford Motor. It trades about -0.09 of its total potential returns per unit of risk. Ford Motor is currently generating about 0.23 per unit of volatility. If you would invest 1,015 in Ford Motor on September 1, 2024 and sell it today you would earn a total of 98.00 from holding Ford Motor or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worksport vs. Ford Motor
Performance |
| Timeline |
| Worksport |
| Ford Motor |
Worksport and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worksport and Ford
The main advantage of trading using opposite Worksport and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worksport 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.| Worksport vs. Ford Motor | Worksport vs. General Motors | Worksport vs. Goodyear Tire Rubber | Worksport vs. Li Auto |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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