Correlation Between Ford and LightInTheBox Holding
Can any of the company-specific risk be diversified away by investing in both Ford and LightInTheBox Holding 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 LightInTheBox Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and LightInTheBox Holding Co, you can compare the effects of market volatilities on Ford and LightInTheBox Holding 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 LightInTheBox Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and LightInTheBox Holding.
Diversification Opportunities for Ford and LightInTheBox Holding
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and LightInTheBox is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and LightInTheBox Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LightInTheBox Holding 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 LightInTheBox Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LightInTheBox Holding has no effect on the direction of Ford i.e., Ford and LightInTheBox Holding go up and down completely randomly.
Pair Corralation between Ford and LightInTheBox Holding
Taking into account the 90-day investment horizon Ford is expected to generate 5.67 times less return on investment than LightInTheBox Holding. But when comparing it to its historical volatility, Ford Motor is 3.35 times less risky than LightInTheBox Holding. It trades about 0.07 of its potential returns per unit of risk. LightInTheBox Holding Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 123.00 in LightInTheBox Holding Co on August 25, 2025 and sell it today you would earn a total of 69.00 from holding LightInTheBox Holding Co or generate 56.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. LightInTheBox Holding Co
Performance |
| Timeline |
| Ford Motor |
| LightInTheBox Holding |
Ford and LightInTheBox Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and LightInTheBox Holding
The main advantage of trading using opposite Ford and LightInTheBox Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, LightInTheBox Holding 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 LightInTheBox Holding will offset losses from the drop in LightInTheBox Holding's long position.The idea behind Ford Motor and LightInTheBox Holding Co 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.| LightInTheBox Holding vs. The Brand House | LightInTheBox Holding vs. QVC Group | LightInTheBox Holding vs. Tandy Leather Factory | LightInTheBox Holding vs. Tuniu Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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