Correlation Between Ford and E79 Gold
Can any of the company-specific risk be diversified away by investing in both Ford and E79 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 E79 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 E79 Gold Mines, you can compare the effects of market volatilities on Ford and E79 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 E79 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and E79 Gold.
Diversification Opportunities for Ford and E79 Gold
Good diversification
The 3 months correlation between Ford and E79 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and E79 Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E79 Gold Mines 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 E79 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E79 Gold Mines has no effect on the direction of Ford i.e., Ford and E79 Gold go up and down completely randomly.
Pair Corralation between Ford and E79 Gold
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.47 times more return on investment than E79 Gold. However, Ford Motor is 2.14 times less risky than E79 Gold. It trades about 0.01 of its potential returns per unit of risk. E79 Gold Mines is currently generating about -0.05 per unit of risk. If you would invest 1,115 in Ford Motor on August 30, 2024 and sell it today you would lose (5.00) from holding Ford Motor or give up 0.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Ford Motor vs. E79 Gold Mines
Performance |
| Timeline |
| Ford Motor |
| E79 Gold Mines |
Ford and E79 Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and E79 Gold
The main advantage of trading using opposite Ford and E79 Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, E79 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 E79 Gold will offset losses from the drop in E79 Gold's long position.The idea behind Ford Motor and E79 Gold Mines 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.| E79 Gold vs. Northern Star Resources | E79 Gold vs. Evolution Mining | E79 Gold vs. Bluescope Steel | E79 Gold vs. Aneka Tambang Tbk |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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