Correlation Between Ford and Austin Resources
Can any of the company-specific risk be diversified away by investing in both Ford and Austin Resources 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 Austin Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Austin Resources, you can compare the effects of market volatilities on Ford and Austin Resources 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 Austin Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Austin Resources.
Diversification Opportunities for Ford and Austin Resources
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Austin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Austin Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Resources 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 Austin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Resources has no effect on the direction of Ford i.e., Ford and Austin Resources go up and down completely randomly.
Pair Corralation between Ford and Austin Resources
If you would invest 1,048 in Ford Motor on September 12, 2024 and sell it today you would lose (7.00) from holding Ford Motor or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Ford Motor vs. Austin Resources
Performance |
| Timeline |
| Ford Motor |
| Austin Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Austin Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Austin Resources
The main advantage of trading using opposite Ford and Austin Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Austin Resources 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 Austin Resources will offset losses from the drop in Austin Resources' long position.The idea behind Ford Motor and Austin Resources 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.| Austin Resources vs. Bank of Nova | Austin Resources vs. Precious Metals And | Austin Resources vs. Talon Metals Corp | Austin Resources vs. First National Financial |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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