Correlation Between Ford and SPDR Bloomberg

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

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

Diversification Opportunities for Ford and SPDR Bloomberg

-0.16

Correlation Coefficient

Ford  SPDR Bloomberg

Good diversification

The 3 months correlation between Ford and SPDR is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SPDR Bloomberg International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Bloomberg Inter 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 SPDR Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Bloomberg Inter has no effect on the direction of Ford i.e., Ford and SPDR Bloomberg go up and down completely randomly.

Pair Corralation between Ford and SPDR Bloomberg

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the SPDR Bloomberg. In addition to that, Ford is 3.3 times more volatile than SPDR Bloomberg International. It trades about -0.32 of its total potential returns per unit of risk. SPDR Bloomberg International is currently generating about -0.18 per unit of volatility. If you would invest  2,901  in SPDR Bloomberg International on September 20, 2024 and sell it today you would lose (61.00) from holding SPDR Bloomberg International or give up 2.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  SPDR Bloomberg International

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SPDR Bloomberg Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Bloomberg International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Ford and SPDR Bloomberg

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

The idea behind Ford Motor and SPDR Bloomberg International 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.