Correlation Between Ford and Atco Mining
Can any of the company-specific risk be diversified away by investing in both Ford and Atco Mining 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 Atco Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Atco Mining, you can compare the effects of market volatilities on Ford and Atco Mining 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 Atco Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Atco Mining.
Diversification Opportunities for Ford and Atco Mining
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Atco is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Atco Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atco 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 Atco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atco Mining has no effect on the direction of Ford i.e., Ford and Atco Mining go up and down completely randomly.
Pair Corralation between Ford and Atco Mining
Taking into account the 90-day investment horizon Ford is expected to generate 50.78 times less return on investment than Atco Mining. But when comparing it to its historical volatility, Ford Motor is 7.03 times less risky than Atco Mining. It trades about 0.01 of its potential returns per unit of risk. Atco Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2.45 in Atco Mining on August 25, 2024 and sell it today you would lose (0.97) from holding Atco Mining or give up 39.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Ford Motor vs. Atco Mining
Performance |
| Timeline |
| Ford Motor |
| Atco Mining |
Ford and Atco Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Atco Mining
The main advantage of trading using opposite Ford and Atco Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Atco Mining 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 Atco Mining will offset losses from the drop in Atco Mining's long position.The idea behind Ford Motor and Atco 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.| Atco Mining vs. Aquestive Therapeutics | Atco Mining vs. FormFactor | Atco Mining vs. Flex | Atco Mining vs. ScanSource |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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