Correlation Between Ford and InFintT Acquisition

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

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

Diversification Opportunities for Ford and InFintT Acquisition

0.39

Correlation Coefficient

Ford  InFintT Acquisition

Weak diversification

The 3 months correlation between Ford and InFintT is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and InFintT Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InFintT Acquisition Corp 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 InFintT Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InFintT Acquisition Corp has no effect on the direction of Ford i.e., Ford and InFintT Acquisition go up and down completely randomly.

Pair Corralation between Ford and InFintT Acquisition

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.16 times more return on investment than InFintT Acquisition. However, Ford Motor is 6.44 times less risky than InFintT Acquisition. It trades about -0.06 of its potential returns per unit of risk. InFintT Acquisition Corp is currently generating about -0.2 per unit of risk. If you would invest  1,250  in Ford Motor on September 30, 2024 and sell it today you would lose (247.00) from holding Ford Motor or give up 19.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	35.71%
Values	Daily Returns

Ford Motor  vs.  InFintT Acquisition Corp

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 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.

InFintT Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InFintT Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, InFintT Acquisition is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ford and InFintT Acquisition

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

The idea behind Ford Motor and InFintT Acquisition Corp 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.