Correlation Between Ford and Ninepoint Energy
Can any of the company-specific risk be diversified away by investing in both Ford and Ninepoint Energy 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 Ninepoint Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Ninepoint Energy Income, you can compare the effects of market volatilities on Ford and Ninepoint Energy 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 Ninepoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Ninepoint Energy.
Diversification Opportunities for Ford and Ninepoint Energy
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Ninepoint is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ninepoint Energy Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninepoint Energy Income 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 Ninepoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninepoint Energy Income has no effect on the direction of Ford i.e., Ford and Ninepoint Energy go up and down completely randomly.
Pair Corralation between Ford and Ninepoint Energy
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Ninepoint Energy. In addition to that, Ford is 1.15 times more volatile than Ninepoint Energy Income. It trades about -0.18 of its total potential returns per unit of risk. Ninepoint Energy Income is currently generating about -0.14 per unit of volatility. If you would invest 1,933 in Ninepoint Energy Income on September 12, 2024 and sell it today you would lose (85.00) from holding Ninepoint Energy Income or give up 4.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. Ninepoint Energy Income
Performance |
| Timeline |
| Ford Motor |
| Ninepoint Energy Income |
Ford and Ninepoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Ninepoint Energy
The main advantage of trading using opposite Ford and Ninepoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Ninepoint Energy 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 Ninepoint Energy will offset losses from the drop in Ninepoint Energy's long position.The idea behind Ford Motor and Ninepoint Energy Income 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.| Ninepoint Energy vs. Ninepoint Bitcoin ETF | Ninepoint Energy vs. Ninepoint Energy | Ninepoint Energy vs. Ninepoint Bitcoin ETF | Ninepoint Energy vs. Ninepoint Web3 Innovators |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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