Correlation Between Ford and Bancor Network

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Can any of the company-specific risk be diversified away by investing in both Ford and Bancor Network 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 Bancor Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Bancor Network Token, you can compare the effects of market volatilities on Ford and Bancor Network 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 Bancor Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Bancor Network.

Diversification Opportunities for Ford and Bancor Network

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Ford and Bancor is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Bancor Network Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancor Network Token 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 Bancor Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancor Network Token has no effect on the direction of Ford i.e., Ford and Bancor Network go up and down completely randomly.

Pair Corralation between Ford and Bancor Network

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.68 times more return on investment than Bancor Network. However, Ford Motor is 1.47 times less risky than Bancor Network. It trades about 0.02 of its potential returns per unit of risk. Bancor Network Token is currently generating about -0.02 per unit of risk. If you would invest  1,109  in Ford Motor on July 4, 2022 and sell it today you would earn a total of  11.00  from holding Ford Motor or generate 0.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy96.97%
ValuesDaily Returns

Ford Motor  vs.  Bancor Network Token

 Performance (%) 
       Timeline  
Ford Motor 
Ford Performance
1 of 100
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. In spite of rather sound technical and fundamental indicators, Ford is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ford Price Channel

Bancor Network Token 
Bancor Performance
0 of 100
Over the last 90 days Bancor Network Token has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bancor Network is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bancor Price Channel

Ford and Bancor Network Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ford and Bancor Network

The main advantage of trading using opposite Ford and Bancor Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Bancor Network 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 Bancor Network will offset losses from the drop in Bancor Network's long position.
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The idea behind Ford Motor and Bancor Network Token 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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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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