Correlation Between Ford and Novavax

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

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

Diversification Opportunities for Ford and Novavax

0.23

Correlation Coefficient

Ford  Novavax

Modest diversification

The 3 months correlation between Ford and Novavax is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Novavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novavax 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 Novavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novavax has no effect on the direction of Ford i.e., Ford and Novavax go up and down completely randomly.

Pair Corralation between Ford and Novavax

Taking into account the 90-day investment horizon Ford is expected to generate 1.19 times less return on investment than Novavax. But when comparing it to its historical volatility, Ford Motor is 2.58 times less risky than Novavax. It trades about 0.08 of its potential returns per unit of risk. Novavax is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  627.00  in Novavax on May 4, 2025 and sell it today you would earn a total of  29.00  from holding Novavax or generate 4.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Novavax

Ford Motor

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Novavax

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Novavax are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Novavax may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Ford and Novavax

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

The idea behind Ford Motor and Novavax 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.