Correlation Between Ford and Nicola Mining
Can any of the company-specific risk be diversified away by investing in both Ford and Nicola Mining 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 Nicola Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Nicola Mining, you can compare the effects of market volatilities on Ford and Nicola Mining 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 Nicola Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Nicola Mining.
Diversification Opportunities for Ford and Nicola Mining
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Nicola is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Nicola Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicola 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 Nicola Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicola Mining has no effect on the direction of Ford i.e., Ford and Nicola Mining go up and down completely randomly.
Pair Corralation between Ford and Nicola Mining
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.65 times more return on investment than Nicola Mining. However, Ford Motor is 1.54 times less risky than Nicola Mining. It trades about 0.09 of its potential returns per unit of risk. Nicola Mining is currently generating about 0.01 per unit of risk. If you would invest 988.00 in Ford Motor on October 29, 2024 and sell it today you would earn a total of 24.00 from holding Ford Motor or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 47.37% |
| Values | Daily Returns |
Ford Motor vs. Nicola Mining
Performance |
| Timeline |
| Ford Motor |
| Nicola Mining |
Ford and Nicola Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Nicola Mining
The main advantage of trading using opposite Ford and Nicola Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Nicola Mining 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 Nicola Mining will offset losses from the drop in Nicola Mining's long position.The idea behind Ford Motor and Nicola 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.| Nicola Mining vs. Hannan Metals | Nicola Mining vs. Atco Mining | Nicola Mining vs. Leading Edge Materials | Nicola Mining vs. Arianne Phosphate |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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