Correlation Between Ford and Sulliden Minerals
Can any of the company-specific risk be diversified away by investing in both Ford and Sulliden Minerals 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 Sulliden Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Sulliden Minerals SA, you can compare the effects of market volatilities on Ford and Sulliden Minerals 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 Sulliden Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Sulliden Minerals.
Diversification Opportunities for Ford and Sulliden Minerals
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Sulliden is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sulliden Minerals SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sulliden Minerals 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 Sulliden Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sulliden Minerals has no effect on the direction of Ford i.e., Ford and Sulliden Minerals go up and down completely randomly.
Pair Corralation between Ford and Sulliden Minerals
Taking into account the 90-day investment horizon Ford is expected to generate 13.44 times less return on investment than Sulliden Minerals. But when comparing it to its historical volatility, Ford Motor is 5.87 times less risky than Sulliden Minerals. It trades about 0.03 of its potential returns per unit of risk. Sulliden Minerals SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Sulliden Minerals SA on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Sulliden Minerals SA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Sulliden Minerals SA
Performance |
| Timeline |
| Ford Motor |
| Sulliden Minerals |
Ford and Sulliden Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Sulliden Minerals
The main advantage of trading using opposite Ford and Sulliden Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Sulliden Minerals 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 Sulliden Minerals will offset losses from the drop in Sulliden Minerals' long position.The idea behind Ford Motor and Sulliden Minerals SA 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.| Sulliden Minerals vs. Serabi Gold PLC | Sulliden Minerals vs. Signature Resources | Sulliden Minerals vs. Plata Latina Minerals | Sulliden Minerals vs. Pacific Imperial Mines |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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