Correlation Between Ford and PUMA ENERGY
Can any of the company-specific risk be diversified away by investing in both Ford and PUMA 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 PUMA 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 PUMA ENERGY ZAMBIA, you can compare the effects of market volatilities on Ford and PUMA 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 PUMA ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and PUMA ENERGY.
Diversification Opportunities for Ford and PUMA ENERGY
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and PUMA is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PUMA ENERGY ZAMBIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PUMA ENERGY ZAMBIA 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 PUMA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PUMA ENERGY ZAMBIA has no effect on the direction of Ford i.e., Ford and PUMA ENERGY go up and down completely randomly.
Pair Corralation between Ford and PUMA ENERGY
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the PUMA ENERGY. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.12 times less risky than PUMA ENERGY. The stock trades about -0.01 of its potential returns per unit of risk. The PUMA ENERGY ZAMBIA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 304.00 in PUMA ENERGY ZAMBIA on September 3, 2024 and sell it today you would earn a total of 276.00 from holding PUMA ENERGY ZAMBIA or generate 90.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. PUMA ENERGY ZAMBIA
Performance |
| Timeline |
| Ford Motor |
| PUMA ENERGY ZAMBIA |
Ford and PUMA ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and PUMA ENERGY
The main advantage of trading using opposite Ford and PUMA ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, PUMA 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 PUMA ENERGY will offset losses from the drop in PUMA ENERGY's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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