Correlation Between Ford and Clarity Gold
Can any of the company-specific risk be diversified away by investing in both Ford and Clarity 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 Clarity 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 Clarity Gold Corp, you can compare the effects of market volatilities on Ford and Clarity 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 Clarity Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Clarity Gold.
Diversification Opportunities for Ford and Clarity Gold
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Clarity is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Clarity Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarity 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 Clarity Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarity Gold Corp has no effect on the direction of Ford i.e., Ford and Clarity Gold go up and down completely randomly.
Pair Corralation between Ford and Clarity Gold
Taking into account the 90-day investment horizon Ford is expected to generate 19.26 times less return on investment than Clarity Gold. But when comparing it to its historical volatility, Ford Motor is 5.17 times less risky than Clarity Gold. It trades about 0.01 of its potential returns per unit of risk. Clarity Gold Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Clarity Gold Corp on September 4, 2024 and sell it today you would lose (8.00) from holding Clarity Gold Corp or give up 72.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ford Motor vs. Clarity Gold Corp
Performance |
| Timeline |
| Ford Motor |
| Clarity Gold Corp |
Ford and Clarity Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Clarity Gold
The main advantage of trading using opposite Ford and Clarity Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Clarity 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 Clarity Gold will offset losses from the drop in Clarity Gold's long position.The idea behind Ford Motor and Clarity 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.| Clarity Gold vs. Harmony Gold Mining | Clarity Gold vs. SPACE | Clarity Gold vs. T Rowe Price | Clarity Gold vs. Ampleforth |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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