Correlation Between Ford and Atlas Lithium
Can any of the company-specific risk be diversified away by investing in both Ford and Atlas Lithium 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 Atlas Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Atlas Lithium, you can compare the effects of market volatilities on Ford and Atlas Lithium 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 Atlas Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Atlas Lithium.
Diversification Opportunities for Ford and Atlas Lithium
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Atlas is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Atlas Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Lithium 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 Atlas Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Lithium has no effect on the direction of Ford i.e., Ford and Atlas Lithium go up and down completely randomly.
Pair Corralation between Ford and Atlas Lithium
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.47 times more return on investment than Atlas Lithium. However, Ford Motor is 2.15 times less risky than Atlas Lithium. It trades about 0.08 of its potential returns per unit of risk. Atlas Lithium is currently generating about 0.01 per unit of risk. If you would invest 990.00 in Ford Motor on November 1, 2024 and sell it today you would earn a total of 26.00 from holding Ford Motor or generate 2.63% 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. Atlas Lithium
Performance |
| Timeline |
| Ford Motor |
| Atlas Lithium |
Ford and Atlas Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Atlas Lithium
The main advantage of trading using opposite Ford and Atlas Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Atlas Lithium 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 Atlas Lithium will offset losses from the drop in Atlas Lithium's long position.The idea behind Ford Motor and Atlas Lithium 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.| Atlas Lithium vs. SilverCrest Metals | Atlas Lithium vs. New Pacific Metals | Atlas Lithium vs. Endeavour Silver Corp | Atlas Lithium vs. McEwen Mining |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |