Correlation Between Ford and Niu Technologies
Can any of the company-specific risk be diversified away by investing in both Ford and Niu Technologies 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 Niu Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Niu Technologies, you can compare the effects of market volatilities on Ford and Niu Technologies 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 Niu Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Niu Technologies.
Diversification Opportunities for Ford and Niu Technologies
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Niu is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Niu Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niu Technologies 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 Niu Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niu Technologies has no effect on the direction of Ford i.e., Ford and Niu Technologies go up and down completely randomly.
Pair Corralation between Ford and Niu Technologies
Taking into account the 90-day investment horizon Ford is expected to generate 77.55 times less return on investment than Niu Technologies. But when comparing it to its historical volatility, Ford Motor is 3.74 times less risky than Niu Technologies. It trades about 0.01 of its potential returns per unit of risk. Niu Technologies is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 170.00 in Niu Technologies on January 27, 2024 and sell it today you would earn a total of 35.00 from holding Niu Technologies or generate 20.59% 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. Niu Technologies
Performance |
| Timeline |
| Ford Motor |
| Niu Technologies |
Ford and Niu Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Niu Technologies
The main advantage of trading using opposite Ford and Niu Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Niu Technologies 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 Niu Technologies will offset losses from the drop in Niu Technologies' long position.| Ford vs. Pfizer Inc | Ford vs. Hertz Global Holdings | Ford vs. EASTMAN CHEM 45 | Ford vs. Fuller Thaler Behavioral |
| Niu Technologies vs. Pfizer Inc | Niu Technologies vs. Hertz Global Holdings | Niu Technologies vs. EASTMAN CHEM 45 | Niu Technologies vs. Fuller Thaler Behavioral |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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