Correlation Between Ford and Pampa Metals
Can any of the company-specific risk be diversified away by investing in both Ford and Pampa 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 Pampa 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 Pampa Metals, you can compare the effects of market volatilities on Ford and Pampa 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 Pampa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Pampa Metals.
Diversification Opportunities for Ford and Pampa Metals
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Pampa is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Pampa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa 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 Pampa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Metals has no effect on the direction of Ford i.e., Ford and Pampa Metals go up and down completely randomly.
Pair Corralation between Ford and Pampa Metals
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Pampa Metals. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 25.29 times less risky than Pampa Metals. The stock trades about 0.0 of its potential returns per unit of risk. The Pampa Metals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Pampa Metals on September 1, 2024 and sell it today you would lose (5.00) from holding Pampa Metals or give up 25.0% 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. Pampa Metals
Performance |
| Timeline |
| Ford Motor |
| Pampa Metals |
Ford and Pampa Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Pampa Metals
The main advantage of trading using opposite Ford and Pampa Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Pampa 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 Pampa Metals will offset losses from the drop in Pampa Metals' long position.The idea behind Ford Motor and Pampa 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.| Pampa Metals vs. Surge Battery Metals | Pampa Metals vs. United Royale Holdings | Pampa Metals vs. Hillcrest Energy Technologies | Pampa Metals vs. Star Alliance International |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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