Correlation Between Ford and Santacruz Silver
Can any of the company-specific risk be diversified away by investing in both Ford and Santacruz Silver 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 Santacruz Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Santacruz Silver Mining, you can compare the effects of market volatilities on Ford and Santacruz Silver 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 Santacruz Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Santacruz Silver.
Diversification Opportunities for Ford and Santacruz Silver
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Santacruz is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Santacruz Silver Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santacruz Silver Mining 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 Santacruz Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santacruz Silver Mining has no effect on the direction of Ford i.e., Ford and Santacruz Silver go up and down completely randomly.
Pair Corralation between Ford and Santacruz Silver
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Santacruz Silver. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 5.02 times less risky than Santacruz Silver. The stock trades about -0.34 of its potential returns per unit of risk. The Santacruz Silver Mining is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Santacruz Silver Mining on September 20, 2024 and sell it today you would lose (2.00) from holding Santacruz Silver Mining or give up 9.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Santacruz Silver Mining
Performance |
| Timeline |
| Ford Motor |
| Santacruz Silver Mining |
Ford and Santacruz Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Santacruz Silver
The main advantage of trading using opposite Ford and Santacruz Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Santacruz Silver 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 Santacruz Silver will offset losses from the drop in Santacruz Silver's long position.The idea behind Ford Motor and Santacruz Silver Mining 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.| Santacruz Silver vs. Superior Plus Corp | Santacruz Silver vs. NMI Holdings | Santacruz Silver vs. SIVERS SEMICONDUCTORS AB | Santacruz Silver vs. NorAm Drilling AS |
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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