Correlation Between Ford and IShares IBonds

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

By analyzing existing cross correlation between Ford Motor and iShares iBonds 2024, you can compare the effects of market volatilities on Ford and IShares IBonds 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 IShares IBonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and IShares IBonds.

Diversification Opportunities for Ford and IShares IBonds

0.43

Correlation Coefficient

Ford  IShares IBonds

Very weak diversification

The 3 months correlation between Ford and IShares is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and iShares iBonds 2024 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBonds 2024 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 IShares IBonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBonds 2024 has no effect on the direction of Ford i.e., Ford and IShares IBonds go up and down completely randomly.

Pair Corralation between Ford and IShares IBonds

Taking into account the 90-day investment horizon Ford Motor is expected to generate 23.07 times more return on investment than IShares IBonds. However, Ford is 23.07 times more volatile than iShares iBonds 2024. It trades about 0.02 of its potential returns per unit of risk. iShares iBonds 2024 is currently generating about 0.24 per unit of risk. If you would invest  1,035  in Ford Motor on September 4, 2024 and sell it today you would earn a total of  63.00  from holding Ford Motor or generate 6.09% 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.  iShares iBonds 2024

Ford Motor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

iShares iBonds 2024

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares iBonds 2024 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, IShares IBonds is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ford and IShares IBonds

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

The idea behind Ford Motor and iShares iBonds 2024 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.