Correlation Between Ford and Grayscale Filecoin

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

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

Diversification Opportunities for Ford and Grayscale Filecoin

0.03

Correlation Coefficient

Ford  Grayscale Filecoin

Significant diversification

The 3 months correlation between Ford and Grayscale is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Grayscale Filecoin Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Filecoin Trust 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 Grayscale Filecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Filecoin Trust has no effect on the direction of Ford i.e., Ford and Grayscale Filecoin go up and down completely randomly.

Pair Corralation between Ford and Grayscale Filecoin

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Grayscale Filecoin. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 7.29 times less risky than Grayscale Filecoin. The stock trades about -0.07 of its potential returns per unit of risk. The Grayscale Filecoin Trust is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5,200  in Grayscale Filecoin Trust on September 19, 2024 and sell it today you would earn a total of  2,064  from holding Grayscale Filecoin Trust or generate 39.69% return on investment over 90 days.

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

Ford Motor  vs.  Grayscale Filecoin Trust

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.

Grayscale Filecoin Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Filecoin Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, Grayscale Filecoin reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Grayscale Filecoin

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

The idea behind Ford Motor and Grayscale Filecoin Trust 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.