Correlation Between Ford and Banyan Gold
Can any of the company-specific risk be diversified away by investing in both Ford and Banyan Gold 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 Banyan Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Banyan Gold Corp, you can compare the effects of market volatilities on Ford and Banyan Gold 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 Banyan Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Banyan Gold.
Diversification Opportunities for Ford and Banyan Gold
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Banyan is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Banyan Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banyan Gold 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 Banyan Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banyan Gold Corp has no effect on the direction of Ford i.e., Ford and Banyan Gold go up and down completely randomly.
Pair Corralation between Ford and Banyan Gold
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.75 times more return on investment than Banyan Gold. However, Ford Motor is 1.34 times less risky than Banyan Gold. It trades about 0.05 of its potential returns per unit of risk. Banyan Gold Corp is currently generating about -0.1 per unit of risk. If you would invest 1,092 in Ford Motor on August 26, 2024 and sell it today you would earn a total of 26.00 from holding Ford Motor or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Banyan Gold Corp
Performance |
| Timeline |
| Ford Motor |
| Banyan Gold Corp |
Ford and Banyan Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Banyan Gold
The main advantage of trading using opposite Ford and Banyan Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Banyan Gold 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 Banyan Gold will offset losses from the drop in Banyan Gold's long position.The idea behind Ford Motor and Banyan Gold 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.| Banyan Gold vs. Galway Metals | Banyan Gold vs. Rockhaven Resources | Banyan Gold vs. Cartier Resources | Banyan Gold vs. Maritime Resources 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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