Correlation Between Ford and Las Vegas
Can any of the company-specific risk be diversified away by investing in both Ford and Las Vegas 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 Las Vegas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Las Vegas Sands, you can compare the effects of market volatilities on Ford and Las Vegas 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 Las Vegas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Las Vegas.
Diversification Opportunities for Ford and Las Vegas
Very poor diversification
The 3 months correlation between Ford and Las is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Las Vegas Sands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Las Vegas Sands 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 Las Vegas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Las Vegas Sands has no effect on the direction of Ford i.e., Ford and Las Vegas go up and down completely randomly.
Pair Corralation between Ford and Las Vegas
Taking into account the 90-day investment horizon Ford is expected to generate 1.11 times less return on investment than Las Vegas. But when comparing it to its historical volatility, Ford Motor is 1.08 times less risky than Las Vegas. It trades about 0.16 of its potential returns per unit of risk. Las Vegas Sands is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,941 in Las Vegas Sands on October 10, 2025 and sell it today you would earn a total of 1,202 from holding Las Vegas Sands or generate 24.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Las Vegas Sands
Performance |
| Timeline |
| Ford Motor |
| Las Vegas Sands |
Ford and Las Vegas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Las Vegas
The main advantage of trading using opposite Ford and Las Vegas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Las Vegas 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 Las Vegas will offset losses from the drop in Las Vegas' long position.The idea behind Ford Motor and Las Vegas Sands 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.| Las Vegas vs. Flutter Entertainment plc | Las Vegas vs. Copart Inc | Las Vegas vs. Chipotle Mexican Grill | Las Vegas vs. Yum Brands |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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