Correlation Between Ford and Fisker

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

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

Diversification Opportunities for Ford and Fisker

-0.77

Correlation Coefficient

Ford  Fisker

Pay attention - limited upside

The 3 months correlation between Ford and Fisker is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Fisker Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fisker Inc 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 Fisker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fisker Inc has no effect on the direction of Ford i.e., Ford and Fisker go up and down completely randomly.

Pair Corralation between Ford and Fisker

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.06 times more return on investment than Fisker. However, Ford Motor is 17.04 times less risky than Fisker. It trades about 0.01 of its potential returns per unit of risk. Fisker Inc is currently generating about -0.85 per unit of risk. If you would invest  1,290  in Ford Motor on January 24, 2024 and sell it today you would lose (2.00) from holding Ford Motor or give up 0.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	25.0%
Values	Daily Returns

Ford Motor  vs.  Fisker Inc

Ford Motor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford reported solid returns over the last few months and may actually be approaching a breakup point.

Fisker Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fisker Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ford and Fisker

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

The idea behind Ford Motor and Fisker Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..