Correlation Between Ford and Sun Peak
Can any of the company-specific risk be diversified away by investing in both Ford and Sun Peak 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 Sun Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Sun Peak Metals, you can compare the effects of market volatilities on Ford and Sun Peak 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 Sun Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Sun Peak.
Diversification Opportunities for Ford and Sun Peak
Very weak diversification
The 3 months correlation between Ford and Sun is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak 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 Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Ford i.e., Ford and Sun Peak go up and down completely randomly.
Pair Corralation between Ford and Sun Peak
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Sun Peak. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 3.18 times less risky than Sun Peak. The stock trades about -0.01 of its potential returns per unit of risk. The Sun Peak Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Sun Peak Metals on October 25, 2024 and sell it today you would earn a total of 3.00 from holding Sun Peak Metals or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Ford Motor vs. Sun Peak Metals
Performance |
| Timeline |
| Ford Motor |
| Sun Peak Metals |
Ford and Sun Peak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Sun Peak
The main advantage of trading using opposite Ford and Sun Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Sun Peak 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 Sun Peak will offset losses from the drop in Sun Peak's long position.The idea behind Ford Motor and Sun Peak 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.| Sun Peak vs. Oncolytics Biotech | Sun Peak vs. Vizsla Silver Corp | Sun Peak vs. Aya Gold Silver | Sun Peak vs. Air Canada |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |