Correlation Between Ford and Convex Finance

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

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

Diversification Opportunities for Ford and Convex Finance

0.01

Correlation Coefficient

Ford  Convex Finance

Significant diversification

The 3 months correlation between Ford and Convex is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Convex Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Convex Finance 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 Convex Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Convex Finance has no effect on the direction of Ford i.e., Ford and Convex Finance go up and down completely randomly.

Pair Corralation between Ford and Convex Finance

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.25 times more return on investment than Convex Finance. However, Ford Motor is 4.01 times less risky than Convex Finance. It trades about 0.06 of its potential returns per unit of risk. Convex Finance is currently generating about -0.11 per unit of risk. If you would invest  971.00  in Ford Motor on December 27, 2024 and sell it today you would earn a total of  58.00  from holding Ford Motor or generate 5.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Ford Motor  vs.  Convex Finance

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Convex Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Convex Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Convex Finance shareholders.

Pair Trading with Ford and Convex Finance

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

The idea behind Ford Motor and Convex Finance 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.