Correlation Between Ford and International Battery
Can any of the company-specific risk be diversified away by investing in both Ford and International Battery 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 International Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and International Battery Metals, you can compare the effects of market volatilities on Ford and International Battery 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 International Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and International Battery.
Diversification Opportunities for Ford and International Battery
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and International is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and International Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Battery 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 International Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Battery has no effect on the direction of Ford i.e., Ford and International Battery go up and down completely randomly.
Pair Corralation between Ford and International Battery
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.34 times more return on investment than International Battery. However, Ford Motor is 2.93 times less risky than International Battery. It trades about 0.01 of its potential returns per unit of risk. International Battery Metals is currently generating about -0.04 per unit of risk. If you would invest 1,148 in Ford Motor on September 3, 2024 and sell it today you would lose (35.00) from holding Ford Motor or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. International Battery Metals
Performance |
| Timeline |
| Ford Motor |
| International Battery |
Ford and International Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and International Battery
The main advantage of trading using opposite Ford and International Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, International Battery 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 International Battery will offset losses from the drop in International Battery's long position.The idea behind Ford Motor and International Battery Metals 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.| International Battery vs. Savannah Resources Plc | International Battery vs. Tartisan Nickel Corp | International Battery vs. Critical Elements | International Battery vs. Lithium Energi Exploration |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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