Correlation Between Ford and Sable Offshore
Can any of the company-specific risk be diversified away by investing in both Ford and Sable Offshore 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 Sable Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Sable Offshore Corp, you can compare the effects of market volatilities on Ford and Sable Offshore 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 Sable Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Sable Offshore.
Diversification Opportunities for Ford and Sable Offshore
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Sable is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sable Offshore Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Offshore Corp 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 Sable Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Offshore Corp has no effect on the direction of Ford i.e., Ford and Sable Offshore go up and down completely randomly.
Pair Corralation between Ford and Sable Offshore
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Sable Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 2.08 times less risky than Sable Offshore. The stock trades about 0.0 of its potential returns per unit of risk. The Sable Offshore Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,499 in Sable Offshore Corp on August 24, 2024 and sell it today you would earn a total of 803.00 from holding Sable Offshore Corp or generate 53.57% 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. Sable Offshore Corp
Performance |
| Timeline |
| Ford Motor |
| Sable Offshore Corp |
Ford and Sable Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Sable Offshore
The main advantage of trading using opposite Ford and Sable Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Sable Offshore 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 Sable Offshore will offset losses from the drop in Sable Offshore's long position.The idea behind Ford Motor and Sable Offshore Corp 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.| Sable Offshore vs. Helmerich and Payne | Sable Offshore vs. Noble plc | Sable Offshore vs. Nabors Industries | Sable Offshore vs. Precision Drilling |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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