Correlation Between Ford and Vanguard Index

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ford and Vanguard Index 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 Vanguard Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Vanguard Index Trust, you can compare the effects of market volatilities on Ford and Vanguard Index 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 Vanguard Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Vanguard Index.

Diversification Opportunities for Ford and Vanguard Index

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Ford and Vanguard is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Vanguard Index Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Index Trust 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 Vanguard Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Index Trust has no effect on the direction of Ford i.e., Ford and Vanguard Index go up and down completely randomly.

Pair Corralation between Ford and Vanguard Index

Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.41 times more return on investment than Vanguard Index. However, Ford is 2.41 times more volatile than Vanguard Index Trust. It trades about 0.54 of its potential returns per unit of risk. Vanguard Index Trust is currently generating about 0.48 per unit of risk. If you would invest  1,184  in Ford Motor on May 17, 2022 and sell it today you would earn a total of  434.00  from holding Ford Motor or generate 36.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Ford Motor  vs.  Vanguard Index Trust

 Performance (%) 
       Timeline  
Ford Motor 
Ford Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Ford exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ford Price Channel

Vanguard Index Trust 
Vanguard Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Index Trust are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Index may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Vanguard Price Channel

Ford and Vanguard Index Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ford and Vanguard Index

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

Vanguard Index Trust

Pair trading matchups for Vanguard Index

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Go
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Go
Price Transformation
Use Price Transformation models to analyze depth of different equity instruments across global markets
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go