Correlation Between Ford and Sassy Resources
Can any of the company-specific risk be diversified away by investing in both Ford and Sassy Resources 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 Sassy Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Sassy Resources, you can compare the effects of market volatilities on Ford and Sassy Resources 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 Sassy Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Sassy Resources.
Diversification Opportunities for Ford and Sassy Resources
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Sassy is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Sassy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sassy Resources 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 Sassy Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sassy Resources has no effect on the direction of Ford i.e., Ford and Sassy Resources go up and down completely randomly.
Pair Corralation between Ford and Sassy Resources
Taking into account the 90-day investment horizon Ford is expected to generate 148.36 times less return on investment than Sassy Resources. But when comparing it to its historical volatility, Ford Motor is 8.67 times less risky than Sassy Resources. It trades about 0.0 of its potential returns per unit of risk. Sassy Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Sassy Resources on October 25, 2024 and sell it today you would lose (48.50) from holding Sassy Resources or give up 88.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Ford Motor vs. Sassy Resources
Performance |
| Timeline |
| Ford Motor |
| Sassy Resources |
Ford and Sassy Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Sassy Resources
The main advantage of trading using opposite Ford and Sassy Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Sassy Resources 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 Sassy Resources will offset losses from the drop in Sassy Resources' long position.The idea behind Ford Motor and Sassy Resources 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.| Sassy Resources vs. Pan Global Resources | Sassy Resources vs. Tower Resources | Sassy Resources vs. Metals X Limited | Sassy Resources vs. Nevada King Gold |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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