Correlation Between Ford and Axelum Resources
Can any of the company-specific risk be diversified away by investing in both Ford and Axelum 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 Axelum 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 Axelum Resources Corp, you can compare the effects of market volatilities on Ford and Axelum 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 Axelum Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Axelum Resources.
Diversification Opportunities for Ford and Axelum Resources
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Axelum is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Axelum Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axelum Resources 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 Axelum Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axelum Resources Corp has no effect on the direction of Ford i.e., Ford and Axelum Resources go up and down completely randomly.
Pair Corralation between Ford and Axelum Resources
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.91 times more return on investment than Axelum Resources. However, Ford Motor is 1.1 times less risky than Axelum Resources. It trades about -0.01 of its potential returns per unit of risk. Axelum Resources Corp is currently generating about -0.03 per unit of risk. If you would invest 1,178 in Ford Motor on August 29, 2024 and sell it today you would lose (68.00) from holding Ford Motor or give up 5.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Ford Motor vs. Axelum Resources Corp
Performance |
| Timeline |
| Ford Motor |
| Axelum Resources Corp |
Ford and Axelum Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Axelum Resources
The main advantage of trading using opposite Ford and Axelum Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Axelum 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 Axelum Resources will offset losses from the drop in Axelum Resources' long position.The idea behind Ford Motor and Axelum Resources 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.| Axelum Resources vs. Swift Foods | Axelum Resources vs. Allhome Corp | Axelum Resources vs. Jollibee Foods Corp | Axelum Resources vs. LFM Properties Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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