Correlation Between Ford and GGX Gold
Can any of the company-specific risk be diversified away by investing in both Ford and GGX 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 GGX 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 GGX Gold Corp, you can compare the effects of market volatilities on Ford and GGX 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 GGX Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and GGX Gold.
Diversification Opportunities for Ford and GGX Gold
Modest diversification
The 3 months correlation between Ford and GGX is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and GGX Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GGX Gold Corp 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 GGX Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GGX Gold Corp has no effect on the direction of Ford i.e., Ford and GGX Gold go up and down completely randomly.
Pair Corralation between Ford and GGX Gold
Taking into account the 90-day investment horizon Ford is expected to generate 10.6 times less return on investment than GGX Gold. But when comparing it to its historical volatility, Ford Motor is 4.97 times less risky than GGX Gold. It trades about 0.03 of its potential returns per unit of risk. GGX Gold Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.85 in GGX Gold Corp on August 25, 2024 and sell it today you would lose (0.03) from holding GGX Gold Corp or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. GGX Gold Corp
Performance |
| Timeline |
| Ford Motor |
| GGX Gold Corp |
Ford and GGX Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and GGX Gold
The main advantage of trading using opposite Ford and GGX Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, GGX 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 GGX Gold will offset losses from the drop in GGX Gold's long position.The idea behind Ford Motor and GGX Gold Corp 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.| GGX Gold vs. Aurion Resources | GGX Gold vs. Liberty Gold Corp | GGX Gold vs. Rio2 Limited | GGX Gold vs. Orezone Gold Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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