Correlation Between Ford and Metalpha Technology

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

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

Diversification Opportunities for Ford and Metalpha Technology

-0.08

Correlation Coefficient

Ford  Metalpha Technology

Good diversification

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

Pair Corralation between Ford and Metalpha Technology

Taking into account the 90-day investment horizon Ford is expected to generate 22.49 times less return on investment than Metalpha Technology. But when comparing it to its historical volatility, Ford Motor is 3.93 times less risky than Metalpha Technology. It trades about 0.03 of its potential returns per unit of risk. Metalpha Technology Holding is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  107.00  in Metalpha Technology Holding on December 27, 2024 and sell it today you would earn a total of  75.00  from holding Metalpha Technology Holding or generate 70.09% return on investment over 90 days.

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

Ford Motor  vs.  Metalpha Technology Holding

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Metalpha Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metalpha Technology Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Metalpha Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Metalpha Technology

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

The idea behind Ford Motor and Metalpha Technology Holding 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.