Correlation Between Ford and Nio
Can any of the company-specific risk be diversified away by investing in both Ford and Nio 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 Nio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Nio Class A, you can compare the effects of market volatilities on Ford and Nio 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 Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Nio.
Diversification Opportunities for Ford and Nio
Pay attention - limited upside
The 3 months correlation between Ford and Nio is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A 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 Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of Ford i.e., Ford and Nio go up and down completely randomly.
Pair Corralation between Ford and Nio
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.78 times more return on investment than Nio. However, Ford Motor is 1.28 times less risky than Nio. It trades about 0.02 of its potential returns per unit of risk. Nio Class A is currently generating about -0.45 per unit of risk. If you would invest 1,218 in Ford Motor on January 16, 2024 and sell it today you would earn a total of 5.00 from holding Ford Motor or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Nio Class A
Performance |
| Timeline |
| Ford Motor |
| Nio Class A |
Ford and Nio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Nio
The main advantage of trading using opposite Ford and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Nio 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 Nio will offset losses from the drop in Nio's long position.| Ford vs. Hycroft Mining Holding | Ford vs. Exela Technologies | Ford vs. Aquagold International | Ford vs. Thrivent High Yield |
| Nio vs. Hycroft Mining Holding | Nio vs. Exela Technologies | Nio vs. Aquagold International | Nio vs. Thrivent High Yield |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |