Correlation Between Ford and IShares Silver

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

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

Diversification Opportunities for Ford and IShares Silver

0.09

Correlation Coefficient

Ford  IShares Silver

Significant diversification

The 3 months correlation between Ford and IShares is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and iShares Silver Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Silver Bullion 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 IShares Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Silver Bullion has no effect on the direction of Ford i.e., Ford and IShares Silver go up and down completely randomly.

Pair Corralation between Ford and IShares Silver

Taking into account the 90-day investment horizon Ford is expected to generate 4.71 times less return on investment than IShares Silver. In addition to that, Ford is 1.56 times more volatile than iShares Silver Bullion. It trades about 0.03 of its total potential returns per unit of risk. iShares Silver Bullion is currently generating about 0.19 per unit of volatility. If you would invest  1,397  in iShares Silver Bullion on December 27, 2024 and sell it today you would earn a total of  224.00  from holding iShares Silver Bullion or generate 16.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Ford Motor  vs.  iShares Silver Bullion

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.

iShares Silver Bullion

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Silver Bullion are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, IShares Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and IShares Silver

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

The idea behind Ford Motor and iShares Silver Bullion 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.