Correlation Between Ford and Cipher Mining
Can any of the company-specific risk be diversified away by investing in both Ford and Cipher 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 Cipher 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 Cipher Mining, you can compare the effects of market volatilities on Ford and Cipher 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 Cipher Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Cipher Mining.
Diversification Opportunities for Ford and Cipher Mining
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Cipher is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Cipher Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipher 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 Cipher Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipher Mining has no effect on the direction of Ford i.e., Ford and Cipher Mining go up and down completely randomly.
Pair Corralation between Ford and Cipher Mining
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Cipher Mining. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 5.29 times less risky than Cipher Mining. The stock trades about 0.0 of its potential returns per unit of risk. The Cipher Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 162.00 in Cipher Mining on August 28, 2024 and sell it today you would earn a total of 39.00 from holding Cipher Mining or generate 24.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Cipher Mining
Performance |
| Timeline |
| Ford Motor |
| Cipher Mining |
Ford and Cipher Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Cipher Mining
The main advantage of trading using opposite Ford and Cipher Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Cipher 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 Cipher Mining will offset losses from the drop in Cipher Mining's long position.The idea behind Ford Motor and Cipher 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.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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