Correlation Between Ford and Placer Creek
Can any of the company-specific risk be diversified away by investing in both Ford and Placer Creek 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 Placer Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Placer Creek Mining, you can compare the effects of market volatilities on Ford and Placer Creek 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 Placer Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Placer Creek.
Diversification Opportunities for Ford and Placer Creek
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ford and Placer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Placer Creek Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Placer Creek Mining 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 Placer Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Placer Creek Mining has no effect on the direction of Ford i.e., Ford and Placer Creek go up and down completely randomly.
Pair Corralation between Ford and Placer Creek
If you would invest 1,015 in Ford Motor on September 1, 2024 and sell it today you would earn a total of 98.00 from holding Ford Motor or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Placer Creek Mining
Performance |
| Timeline |
| Ford Motor |
| Placer Creek Mining |
Ford and Placer Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Placer Creek
The main advantage of trading using opposite Ford and Placer Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Placer Creek 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 Placer Creek will offset losses from the drop in Placer Creek's long position.The idea behind Ford Motor and Placer Creek Mining 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.| Placer Creek vs. ATT Inc | Placer Creek vs. Merck Company | Placer Creek vs. Walt Disney | Placer Creek vs. Caterpillar |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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