Correlation Between Ford and Stronghold Digital
Can any of the company-specific risk be diversified away by investing in both Ford and Stronghold Digital 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 Stronghold Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Stronghold Digital Mining, you can compare the effects of market volatilities on Ford and Stronghold Digital 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 Stronghold Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Stronghold Digital.
Diversification Opportunities for Ford and Stronghold Digital
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Stronghold is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Stronghold Digital Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stronghold Digital 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 Stronghold Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stronghold Digital Mining has no effect on the direction of Ford i.e., Ford and Stronghold Digital go up and down completely randomly.
Pair Corralation between Ford and Stronghold Digital
Taking into account the 90-day investment horizon Ford is expected to generate 1.22 times less return on investment than Stronghold Digital. But when comparing it to its historical volatility, Ford Motor is 3.12 times less risky than Stronghold Digital. It trades about 0.04 of its potential returns per unit of risk. Stronghold Digital Mining is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 514.00 in Stronghold Digital Mining on August 27, 2024 and sell it today you would lose (22.00) from holding Stronghold Digital Mining or give up 4.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Stronghold Digital Mining
Performance |
| Timeline |
| Ford Motor |
| Stronghold Digital Mining |
Ford and Stronghold Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Stronghold Digital
The main advantage of trading using opposite Ford and Stronghold Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Stronghold Digital 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 Stronghold Digital will offset losses from the drop in Stronghold Digital's long position.The idea behind Ford Motor and Stronghold Digital 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.| Stronghold Digital vs. Terawulf | Stronghold Digital vs. Iris Energy | Stronghold Digital vs. Argo Blockchain PLC | Stronghold Digital vs. Bitfarms |
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 CEOs Directory module to screen CEOs from public companies around the world.
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