Correlation Between Ford and Kiplin Metals
Can any of the company-specific risk be diversified away by investing in both Ford and Kiplin 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 Kiplin 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 Kiplin Metals, you can compare the effects of market volatilities on Ford and Kiplin 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 Kiplin Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Kiplin Metals.
Diversification Opportunities for Ford and Kiplin Metals
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Kiplin is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Kiplin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiplin Metals 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 Kiplin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiplin Metals has no effect on the direction of Ford i.e., Ford and Kiplin Metals go up and down completely randomly.
Pair Corralation between Ford and Kiplin Metals
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Kiplin Metals. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 3.33 times less risky than Kiplin Metals. The stock trades about -0.01 of its potential returns per unit of risk. The Kiplin Metals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 60.00 in Kiplin Metals on November 9, 2024 and sell it today you would lose (28.00) from holding Kiplin Metals or give up 46.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.25% |
| Values | Daily Returns |
Ford Motor vs. Kiplin Metals
Performance |
| Timeline |
| Ford Motor |
| Kiplin Metals |
Ford and Kiplin Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Kiplin Metals
The main advantage of trading using opposite Ford and Kiplin Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Kiplin 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 Kiplin Metals will offset losses from the drop in Kiplin Metals' long position.The idea behind Ford Motor and Kiplin 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.| Kiplin Metals vs. Arbor Metals Corp | Kiplin Metals vs. Marvel Discovery Corp | Kiplin Metals vs. Fission 30 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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