Correlation Between Ford and Neonode

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

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

Diversification Opportunities for Ford and Neonode

-0.14

Correlation Coefficient

Ford  Neonode

Good diversification

The 3 months correlation between Ford and Neonode is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Neonode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neonode 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 Neonode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neonode has no effect on the direction of Ford i.e., Ford and Neonode go up and down completely randomly.

Pair Corralation between Ford and Neonode

Taking into account the 90-day investment horizon Ford is expected to generate 9.67 times less return on investment than Neonode. But when comparing it to its historical volatility, Ford Motor is 4.16 times less risky than Neonode. It trades about 0.03 of its potential returns per unit of risk. Neonode is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  685.00  in Neonode on September 1, 2024 and sell it today you would earn a total of  135.00  from holding Neonode or generate 19.71% return on investment over 90 days.

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

Ford Motor  vs.  Neonode

Ford Motor

Risk-Adjusted Performance

2 of 100

Weak

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.

Neonode

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neonode are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Neonode displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Neonode

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

The idea behind Ford Motor and Neonode 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.