Correlation Between Ford and Markforged Holding

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

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

Diversification Opportunities for Ford and Markforged Holding

0.29

Correlation Coefficient

Ford  Markforged Holding

Modest diversification

The 3 months correlation between Ford and Markforged is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Markforged Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markforged Holding 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 Markforged Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markforged Holding Corp has no effect on the direction of Ford i.e., Ford and Markforged Holding go up and down completely randomly.

Pair Corralation between Ford and Markforged Holding

Taking into account the 90-day investment horizon Ford is expected to generate 10.5 times less return on investment than Markforged Holding. But when comparing it to its historical volatility, Ford Motor is 2.89 times less risky than Markforged Holding. It trades about 0.04 of its potential returns per unit of risk. Markforged Holding Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  314.00  in Markforged Holding Corp on December 28, 2024 and sell it today you would earn a total of  149.00  from holding Markforged Holding Corp or generate 47.45% return on investment over 90 days.

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

Ford Motor  vs.  Markforged Holding Corp

Ford Motor

Risk-Adjusted Performance

Weak

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.

Markforged Holding Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Markforged Holding Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Markforged Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Markforged Holding

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

The idea behind Ford Motor and Markforged Holding 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.