Correlation Between Ford and Voya Stock

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

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

Diversification Opportunities for Ford and Voya Stock

0.08

Correlation Coefficient

Ford  Voya Stock

Significant diversification

The 3 months correlation between Ford and Voya is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Voya Stock Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Stock Index 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 Voya Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Stock Index has no effect on the direction of Ford i.e., Ford and Voya Stock go up and down completely randomly.

Pair Corralation between Ford and Voya Stock

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Voya Stock. In addition to that, Ford is 1.46 times more volatile than Voya Stock Index. It trades about -0.36 of its total potential returns per unit of risk. Voya Stock Index is currently generating about -0.09 per unit of volatility. If you would invest  2,012  in Voya Stock Index on September 29, 2024 and sell it today you would lose (36.00) from holding Voya Stock Index or give up 1.79% of portfolio value over 90 days.

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

Ford Motor  vs.  Voya Stock Index

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.

Voya Stock Index

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Stock Index are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Stock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Voya Stock

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

The idea behind Ford Motor and Voya Stock Index 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.