Correlation Between Ford and San Leon
Can any of the company-specific risk be diversified away by investing in both Ford and San Leon 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 San Leon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and San Leon Energy, you can compare the effects of market volatilities on Ford and San Leon 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 San Leon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and San Leon.
Diversification Opportunities for Ford and San Leon
Pay attention - limited upside
The 3 months correlation between Ford and San is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and San Leon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Leon 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 San Leon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Leon Energy has no effect on the direction of Ford i.e., Ford and San Leon go up and down completely randomly.
Pair Corralation between Ford and San Leon
If you would invest 1,122 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Ford Motor or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. San Leon Energy
Performance |
| Timeline |
| Ford Motor |
| San Leon Energy |
Ford and San Leon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and San Leon
The main advantage of trading using opposite Ford and San Leon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, San Leon 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 San Leon will offset losses from the drop in San Leon's long position.The idea behind Ford Motor and San Leon 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.| San Leon vs. Horizon Oil Limited | San Leon vs. PetroShale | San Leon vs. Enwell Energy plc | San Leon vs. Tullow Oil plc |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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