Correlation Between Ford and MoneyLion

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

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

Diversification Opportunities for Ford and MoneyLion

0.65

Correlation Coefficient

Ford  MoneyLion

Poor diversification

The 3 months correlation between Ford and MoneyLion is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and MoneyLion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MoneyLion 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 MoneyLion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MoneyLion has no effect on the direction of Ford i.e., Ford and MoneyLion go up and down completely randomly.

Pair Corralation between Ford and MoneyLion

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.51 times more return on investment than MoneyLion. However, Ford Motor is 1.96 times less risky than MoneyLion. It trades about 0.01 of its potential returns per unit of risk. MoneyLion is currently generating about -0.02 per unit of risk. If you would invest  1,290  in Ford Motor on January 25, 2024 and sell it today you would earn a total of  1.00  from holding Ford Motor or generate 0.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Ford Motor  vs.  MoneyLion

Ford Motor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 9 (%) 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.

MoneyLion

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MoneyLion are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, MoneyLion disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and MoneyLion

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

The idea behind Ford Motor and MoneyLion 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.