Correlation Between Ford and HANetf ICAV

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

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

Diversification Opportunities for Ford and HANetf ICAV

0.25

Correlation Coefficient

Ford  HANetf ICAV

Modest diversification

The 3 months correlation between Ford and HANetf is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and HANetf ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANetf ICAV 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 HANetf ICAV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANetf ICAV has no effect on the direction of Ford i.e., Ford and HANetf ICAV go up and down completely randomly.

Pair Corralation between Ford and HANetf ICAV

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the HANetf ICAV. In addition to that, Ford is 1.6 times more volatile than HANetf ICAV . It trades about -0.02 of its total potential returns per unit of risk. HANetf ICAV is currently generating about 0.17 per unit of volatility. If you would invest  1,021  in HANetf ICAV on September 28, 2024 and sell it today you would earn a total of  134.00  from holding HANetf ICAV or generate 13.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Ford Motor  vs.  HANetf ICAV

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 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.

HANetf ICAV

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HANetf ICAV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, HANetf ICAV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and HANetf ICAV

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

The idea behind Ford Motor and HANetf ICAV 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.