Correlation Between Ford and Doré Copper
Can any of the company-specific risk be diversified away by investing in both Ford and Doré Copper 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 Doré Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Dor Copper Mining, you can compare the effects of market volatilities on Ford and Doré Copper 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 Doré Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Doré Copper.
Diversification Opportunities for Ford and Doré Copper
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Doré is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Dor Copper Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dor Copper 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 Doré Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dor Copper Mining has no effect on the direction of Ford i.e., Ford and Doré Copper go up and down completely randomly.
Pair Corralation between Ford and Doré Copper
Taking into account the 90-day investment horizon Ford is expected to generate 16.6 times less return on investment than Doré Copper. But when comparing it to its historical volatility, Ford Motor is 3.28 times less risky than Doré Copper. It trades about 0.01 of its potential returns per unit of risk. Dor Copper Mining is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8.30 in Dor Copper Mining on August 29, 2024 and sell it today you would earn a total of 0.86 from holding Dor Copper Mining or generate 10.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Ford Motor vs. Dor Copper Mining
Performance |
| Timeline |
| Ford Motor |
| Dor Copper Mining |
Ford and Doré Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Doré Copper
The main advantage of trading using opposite Ford and Doré Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Doré Copper 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 Doré Copper will offset losses from the drop in Doré Copper's long position.The idea behind Ford Motor and Dor Copper 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.| Doré Copper vs. Imperial Metals | Doré Copper vs. Bell Copper | Doré Copper vs. Copper Fox Metals | Doré Copper vs. Arizona Sonoran Copper |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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