Correlation Between Ford and Newmont Corp
Can any of the company-specific risk be diversified away by investing in both Ford and Newmont Corp 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 Newmont Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Newmont Corp, you can compare the effects of market volatilities on Ford and Newmont Corp 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 Newmont Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Newmont Corp.
Diversification Opportunities for Ford and Newmont Corp
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Newmont is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Corp 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 Newmont Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Corp has no effect on the direction of Ford i.e., Ford and Newmont Corp go up and down completely randomly.
Pair Corralation between Ford and Newmont Corp
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.02 times more return on investment than Newmont Corp. However, Ford is 1.02 times more volatile than Newmont Corp. It trades about 0.0 of its potential returns per unit of risk. Newmont Corp is currently generating about -0.01 per unit of risk. If you would invest 1,083 in Ford Motor on October 13, 2024 and sell it today you would lose (118.00) from holding Ford Motor or give up 10.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.99% |
| Values | Daily Returns |
Ford Motor vs. Newmont Corp
Performance |
| Timeline |
| Ford Motor |
| Newmont Corp |
Ford and Newmont Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Newmont Corp
The main advantage of trading using opposite Ford and Newmont Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Newmont Corp 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 Newmont Corp will offset losses from the drop in Newmont Corp's long position.The idea behind Ford Motor and Newmont Corp 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.| Newmont Corp vs. Lindsell Train Investment | Newmont Corp vs. Adriatic Metals | Newmont Corp vs. Empire Metals Limited | Newmont Corp vs. EJF Investments |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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