Correlation Between Ford and WisdomTree Issuer

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

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

Diversification Opportunities for Ford and WisdomTree Issuer

0.42

Correlation Coefficient

Ford  WisdomTree Issuer

Very weak diversification

The 3 months correlation between Ford and WisdomTree is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and WisdomTree Issuer ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Issuer 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 WisdomTree Issuer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Issuer ICAV has no effect on the direction of Ford i.e., Ford and WisdomTree Issuer go up and down completely randomly.

Pair Corralation between Ford and WisdomTree Issuer

Taking into account the 90-day investment horizon Ford is expected to generate 31.86 times less return on investment than WisdomTree Issuer. In addition to that, Ford is 1.51 times more volatile than WisdomTree Issuer ICAV. It trades about 0.0 of its total potential returns per unit of risk. WisdomTree Issuer ICAV is currently generating about 0.06 per unit of volatility. If you would invest  3,522  in WisdomTree Issuer ICAV on September 15, 2024 and sell it today you would earn a total of  781.00  from holding WisdomTree Issuer ICAV or generate 22.17% return on investment over 90 days.

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

Ford Motor  vs.  WisdomTree Issuer 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.

WisdomTree Issuer ICAV

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Issuer ICAV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, WisdomTree Issuer is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ford and WisdomTree Issuer

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

The idea behind Ford Motor and WisdomTree Issuer 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..