Correlation Between Ford and Moderna

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

Diversification Opportunities for Ford and Moderna

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ford and Moderna is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Moderna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderna 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 Moderna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderna has no effect on the direction of Ford i.e., Ford and Moderna go up and down completely randomly.

Pair Corralation between Ford and Moderna

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Moderna. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.46 times less risky than Moderna. The stock trades about -0.27 of its potential returns per unit of risk. The Moderna is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  14,000  in Moderna on April 7, 2022 and sell it today you would earn a total of  1,554  from holding Moderna or generate 11.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ford Motor  vs.  Moderna

 Performance (%) 
      Timeline 
Ford Motor 
Ford Performance
0 of 100
Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in August 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0353
Payout Ratio
0.23
Last Split Factor
1748175:10
Forward Annual Dividend Rate
0.4
Dividend Date
2022-06-01
Ex Dividend Date
2022-04-25
Last Split Date
2000-08-03

Ford Price Channel

Moderna 
Moderna Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Moderna are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Moderna is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Moderna Price Channel

Ford and Moderna Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Ford and Moderna

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

Moderna

Pair trading matchups for Moderna

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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