Correlation Between IShares Core and Ford
Can any of the company-specific risk be diversified away by investing in both IShares Core and Ford 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 IShares Core and Ford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and Ford Motor, you can compare the effects of market volatilities on IShares Core and Ford 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 IShares Core with a short position of Ford. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Ford.
Diversification Opportunities for IShares Core and Ford
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Ford is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and Ford Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Motor and IShares Core 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 iShares Core MSCI are associated (or correlated) with Ford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Motor has no effect on the direction of IShares Core i.e., IShares Core and Ford go up and down completely randomly.
Pair Corralation between IShares Core and Ford
Given the investment horizon of 90 days iShares Core MSCI is expected to generate 0.43 times more return on investment than Ford. However, iShares Core MSCI is 2.35 times less risky than Ford. It trades about 0.04 of its potential returns per unit of risk. Ford Motor is currently generating about 0.01 per unit of risk. If you would invest 5,547 in iShares Core MSCI on January 25, 2024 and sell it today you would earn a total of 1,003 from holding iShares Core MSCI or generate 18.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
iShares Core MSCI vs. Ford Motor
Performance |
| Timeline |
| iShares Core MSCI |
| Ford Motor |
IShares Core and Ford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Ford
The main advantage of trading using opposite IShares Core and Ford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Ford 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 Ford will offset losses from the drop in Ford's long position.| IShares Core vs. iShares ESG Aware | IShares Core vs. iShares ESG Aware | IShares Core vs. iShares ESG Aware | IShares Core vs. iShares MSCI USA |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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