Correlation Between Ford and Horizon Space

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

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

Diversification Opportunities for Ford and Horizon Space

0.0

Correlation Coefficient

Ford  Horizon Space

Pay attention - limited upside

The 3 months correlation between Ford and Horizon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Horizon Space Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Space Acquisition 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 Horizon Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Space Acquisition has no effect on the direction of Ford i.e., Ford and Horizon Space go up and down completely randomly.

Pair Corralation between Ford and Horizon Space

Taking into account the 90-day investment horizon Ford is expected to generate 33.11 times less return on investment than Horizon Space. But when comparing it to its historical volatility, Ford Motor is 15.24 times less risky than Horizon Space. It trades about 0.06 of its potential returns per unit of risk. Horizon Space Acquisition is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Horizon Space Acquisition on December 27, 2024 and sell it today you would lose (0.34) from holding Horizon Space Acquisition or give up 17.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	53.33%
Values	Daily Returns

Ford Motor  vs.  Horizon Space Acquisition

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.

Horizon Space Acquisition

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Space Acquisition are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Horizon Space showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Horizon Space

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

The idea behind Ford Motor and Horizon Space Acquisition 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.