Correlation Between Ford and Mineros SA
Can any of the company-specific risk be diversified away by investing in both Ford and Mineros SA 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 Mineros SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Mineros SA, you can compare the effects of market volatilities on Ford and Mineros SA 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 Mineros SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Mineros SA.
Diversification Opportunities for Ford and Mineros SA
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and Mineros is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Mineros SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineros SA 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 Mineros SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineros SA has no effect on the direction of Ford i.e., Ford and Mineros SA go up and down completely randomly.
Pair Corralation between Ford and Mineros SA
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Mineros SA. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.16 times less risky than Mineros SA. The stock trades about -0.02 of its potential returns per unit of risk. The Mineros SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 44.00 in Mineros SA on October 24, 2024 and sell it today you would earn a total of 119.00 from holding Mineros SA or generate 270.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ford Motor vs. Mineros SA
Performance |
Timeline |
Ford Motor |
Mineros SA |
Ford and Mineros SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Mineros SA
The main advantage of trading using opposite Ford and Mineros SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Mineros SA 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 Mineros SA will offset losses from the drop in Mineros SA's long position.The idea behind Ford Motor and Mineros SA 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.Mineros SA vs. Sailfish Royalty Corp | Mineros SA vs. Perseus Mining | Mineros SA vs. Automotive Finco 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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