Correlation Between Ford and Cingulate Warrants

Can any of the company-specific risk be diversified away by investing in both Ford and Cingulate Warrants 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 Cingulate Warrants into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ford Motor and Cingulate Warrants, you can compare the effects of market volatilities on Ford and Cingulate Warrants 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 Cingulate Warrants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Cingulate Warrants.

Diversification Opportunities for Ford and Cingulate Warrants

0.05

Correlation Coefficient

Ford  Cingulate Warrants

Significant diversification

The 3 months correlation between Ford and Cingulate is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Cingulate Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate Warrants 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 Cingulate Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate Warrants has no effect on the direction of Ford i.e., Ford and Cingulate Warrants go up and down completely randomly.

Pair Corralation between Ford and Cingulate Warrants

Taking into account the 90-day investment horizon Ford is expected to generate 30.46 times less return on investment than Cingulate Warrants. But when comparing it to its historical volatility, Ford Motor is 9.3 times less risky than Cingulate Warrants. It trades about 0.03 of its potential returns per unit of risk. Cingulate Warrants is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6.12  in Cingulate Warrants on December 27, 2024 and sell it today you would lose (0.22) from holding Cingulate Warrants or give up 3.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Ford Motor  vs.  Cingulate Warrants

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Cingulate Warrants

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cingulate Warrants are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Cingulate Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Cingulate Warrants

The main advantage of trading using opposite Ford and Cingulate Warrants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Cingulate Warrants 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 Cingulate Warrants will offset losses from the drop in Cingulate Warrants' long position.

The idea behind Ford Motor and Cingulate Warrants 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.