Correlation Between Ford and LithiumBank Resources
Can any of the company-specific risk be diversified away by investing in both Ford and LithiumBank Resources 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 LithiumBank Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and LithiumBank Resources Corp, you can compare the effects of market volatilities on Ford and LithiumBank Resources 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 LithiumBank Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and LithiumBank Resources.
Diversification Opportunities for Ford and LithiumBank Resources
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and LithiumBank is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and LithiumBank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LithiumBank Resources 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 LithiumBank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LithiumBank Resources has no effect on the direction of Ford i.e., Ford and LithiumBank Resources go up and down completely randomly.
Pair Corralation between Ford and LithiumBank Resources
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.58 times more return on investment than LithiumBank Resources. However, Ford Motor is 1.71 times less risky than LithiumBank Resources. It trades about 0.0 of its potential returns per unit of risk. LithiumBank Resources Corp is currently generating about -0.16 per unit of risk. If you would invest 1,169 in Ford Motor on September 2, 2024 and sell it today you would lose (56.00) from holding Ford Motor or give up 4.79% 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. LithiumBank Resources Corp
Performance |
| Timeline |
| Ford Motor |
| LithiumBank Resources |
Ford and LithiumBank Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and LithiumBank Resources
The main advantage of trading using opposite Ford and LithiumBank Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, LithiumBank Resources 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 LithiumBank Resources will offset losses from the drop in LithiumBank Resources' long position.The idea behind Ford Motor and LithiumBank Resources 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.| LithiumBank Resources vs. Canaf Investments | LithiumBank Resources vs. Atrium Mortgage Investment | LithiumBank Resources vs. Westshore Terminals Investment | LithiumBank Resources vs. Jamieson Wellness |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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