Correlation Between Ford and European Metals
Can any of the company-specific risk be diversified away by investing in both Ford and European Metals 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 European Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and European Metals Holdings, you can compare the effects of market volatilities on Ford and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and European Metals.
Diversification Opportunities for Ford and European Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and European is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Ford i.e., Ford and European Metals go up and down completely randomly.
Pair Corralation between Ford and European Metals
If you would invest (100.00) in European Metals Holdings on November 28, 2024 and sell it today you would earn a total of 100.00 from holding European Metals Holdings or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Ford Motor vs. European Metals Holdings
Performance |
| Timeline |
| Ford Motor |
| European Metals Holdings |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Ford and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and European Metals
The main advantage of trading using opposite Ford and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.The idea behind Ford Motor and European Metals Holdings 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.| European Metals vs. International Battery Metals | European Metals vs. Savannah Resources Plc | European Metals vs. Tartisan Nickel Corp | European Metals vs. Critical Elements |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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