Correlation Between Ford and Golden Energy
Can any of the company-specific risk be diversified away by investing in both Ford and Golden Energy 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 Golden Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Golden Energy Offshore, you can compare the effects of market volatilities on Ford and Golden Energy 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 Golden Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Golden Energy.
Diversification Opportunities for Ford and Golden Energy
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Golden is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Golden Energy Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Energy Offshore 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 Golden Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Energy Offshore has no effect on the direction of Ford i.e., Ford and Golden Energy go up and down completely randomly.
Pair Corralation between Ford and Golden Energy
Taking into account the 90-day investment horizon Ford is expected to generate 316.94 times less return on investment than Golden Energy. But when comparing it to its historical volatility, Ford Motor is 38.88 times less risky than Golden Energy. It trades about 0.01 of its potential returns per unit of risk. Golden Energy Offshore is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Golden Energy Offshore on September 3, 2024 and sell it today you would earn a total of 255.00 from holding Golden Energy Offshore or generate 1700.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 53.51% |
| Values | Daily Returns |
Ford Motor vs. Golden Energy Offshore
Performance |
| Timeline |
| Ford Motor |
| Golden Energy Offshore |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ford and Golden Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Golden Energy
The main advantage of trading using opposite Ford and Golden Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Golden Energy 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 Golden Energy will offset losses from the drop in Golden Energy's long position.The idea behind Ford Motor and Golden Energy Offshore 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.| Golden Energy vs. Boyd Gaming | Golden Energy vs. Starbucks | Golden Energy vs. RCI Hospitality Holdings | Golden Energy vs. Life Time Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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