Correlation Between Ford and SUNCOKE ENERGY
Can any of the company-specific risk be diversified away by investing in both Ford and SUNCOKE 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 SUNCOKE 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 SUNCOKE ENERGY, you can compare the effects of market volatilities on Ford and SUNCOKE 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 SUNCOKE ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and SUNCOKE ENERGY.
Diversification Opportunities for Ford and SUNCOKE ENERGY
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and SUNCOKE is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SUNCOKE ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNCOKE ENERGY 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 SUNCOKE ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNCOKE ENERGY has no effect on the direction of Ford i.e., Ford and SUNCOKE ENERGY go up and down completely randomly.
Pair Corralation between Ford and SUNCOKE ENERGY
Taking into account the 90-day investment horizon Ford is expected to generate 4.09 times less return on investment than SUNCOKE ENERGY. But when comparing it to its historical volatility, Ford Motor is 1.15 times less risky than SUNCOKE ENERGY. It trades about 0.02 of its potential returns per unit of risk. SUNCOKE ENERGY is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 817.00 in SUNCOKE ENERGY on September 5, 2024 and sell it today you would earn a total of 383.00 from holding SUNCOKE ENERGY or generate 46.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Ford Motor vs. SUNCOKE ENERGY
Performance |
| Timeline |
| Ford Motor |
| SUNCOKE ENERGY |
Ford and SUNCOKE ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and SUNCOKE ENERGY
The main advantage of trading using opposite Ford and SUNCOKE ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, SUNCOKE 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 SUNCOKE ENERGY will offset losses from the drop in SUNCOKE ENERGY's long position.The idea behind Ford Motor and SUNCOKE ENERGY 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.| SUNCOKE ENERGY vs. TOTAL GABON | SUNCOKE ENERGY vs. Walgreens Boots Alliance | SUNCOKE ENERGY vs. Peak Resources Limited |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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