Correlation Between Xos Equity and Ford

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

By analyzing existing cross correlation between Xos Equity Warrants and Ford Motor, you can compare the effects of market volatilities on Xos Equity and Ford 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 Xos Equity with a short position of Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xos Equity and Ford.

Diversification Opportunities for Xos Equity and Ford

0.07

Correlation Coefficient

Xos Equity  Ford

Significant diversification

The 3 months correlation between Xos and Ford is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Xos Equity Warrants and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and Xos Equity 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 Xos Equity Warrants are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of Xos Equity i.e., Xos Equity and Ford go up and down completely randomly.

Pair Corralation between Xos Equity and Ford

Assuming the 90 days horizon Xos Equity Warrants is expected to generate 11.98 times more return on investment than Ford. However, Xos Equity is 11.98 times more volatile than Ford Motor. It trades about 0.16 of its potential returns per unit of risk. Ford Motor is currently generating about 0.05 per unit of risk. If you would invest  0.50  in Xos Equity Warrants on December 26, 2024 and sell it today you would earn a total of  0.80  from holding Xos Equity Warrants or generate 160.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.67%
Values	Daily Returns

Xos Equity Warrants  vs.  Ford Motor

Xos Equity Warrants

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xos Equity Warrants are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Xos Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Xos Equity and Ford

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

The idea behind Xos Equity Warrants and Ford Motor 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.