Correlation Between Ford and NESNVX

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

By analyzing existing cross correlation between Ford Motor and NESNVX 39 24 SEP 38, you can compare the effects of market volatilities on Ford and NESNVX 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 NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and NESNVX.

Diversification Opportunities for Ford and NESNVX

-0.22

Correlation Coefficient

Ford  NESNVX

Very good diversification

The 3 months correlation between Ford and NESNVX is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and NESNVX 39 24 SEP 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 24 SEP 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 NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 24 SEP has no effect on the direction of Ford i.e., Ford and NESNVX go up and down completely randomly.

Pair Corralation between Ford and NESNVX

Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.04 times more return on investment than NESNVX. However, Ford is 1.04 times more volatile than NESNVX 39 24 SEP 38. It trades about -0.19 of its potential returns per unit of risk. NESNVX 39 24 SEP 38 is currently generating about -0.32 per unit of risk. If you would invest  1,073  in Ford Motor on September 21, 2024 and sell it today you would lose (79.50) from holding Ford Motor or give up 7.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.18%
Values	Daily Returns

Ford Motor  vs.  NESNVX 39 24 SEP 38

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

NESNVX 24 SEP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 39 24 SEP 38 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for NESNVX 39 24 SEP 38 investors.

Pair Trading with Ford and NESNVX

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

The idea behind Ford Motor and NESNVX 39 24 SEP 38 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.