Correlation Between Ford and Cantex Mine
Can any of the company-specific risk be diversified away by investing in both Ford and Cantex Mine 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 Cantex Mine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Cantex Mine Development, you can compare the effects of market volatilities on Ford and Cantex Mine 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 Cantex Mine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Cantex Mine.
Diversification Opportunities for Ford and Cantex Mine
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Cantex is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Cantex Mine Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantex Mine Development 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 Cantex Mine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantex Mine Development has no effect on the direction of Ford i.e., Ford and Cantex Mine go up and down completely randomly.
Pair Corralation between Ford and Cantex Mine
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.33 times more return on investment than Cantex Mine. However, Ford Motor is 3.07 times less risky than Cantex Mine. It trades about 0.09 of its potential returns per unit of risk. Cantex Mine Development is currently generating about -0.11 per unit of risk. If you would invest 1,064 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 76.00 from holding Ford Motor or generate 7.14% 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. Cantex Mine Development
Performance |
| Timeline |
| Ford Motor |
| Cantex Mine Development |
Ford and Cantex Mine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Cantex Mine
The main advantage of trading using opposite Ford and Cantex Mine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Cantex Mine 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 Cantex Mine will offset losses from the drop in Cantex Mine's long position.The idea behind Ford Motor and Cantex Mine Development 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.| Cantex Mine vs. Champion Bear Resources | Cantex Mine vs. Aurelia Metals Limited | Cantex Mine vs. Baroyeca Gold Silver | Cantex Mine vs. Centaurus Metals Limited |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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