Correlation Between Ford and Stelmine Canada
Can any of the company-specific risk be diversified away by investing in both Ford and Stelmine Canada 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 Stelmine Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Stelmine Canada, you can compare the effects of market volatilities on Ford and Stelmine Canada 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 Stelmine Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Stelmine Canada.
Diversification Opportunities for Ford and Stelmine Canada
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Stelmine is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Stelmine Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelmine Canada 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 Stelmine Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelmine Canada has no effect on the direction of Ford i.e., Ford and Stelmine Canada go up and down completely randomly.
Pair Corralation between Ford and Stelmine Canada
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.24 times more return on investment than Stelmine Canada. However, Ford Motor is 4.15 times less risky than Stelmine Canada. It trades about 0.0 of its potential returns per unit of risk. Stelmine Canada is currently generating about -0.01 per unit of risk. If you would invest 1,072 in Ford Motor on October 7, 2024 and sell it today you would lose (84.00) from holding Ford Motor or give up 7.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Ford Motor vs. Stelmine Canada
Performance |
| Timeline |
| Ford Motor |
| Stelmine Canada |
Ford and Stelmine Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Stelmine Canada
The main advantage of trading using opposite Ford and Stelmine Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Stelmine Canada 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 Stelmine Canada will offset losses from the drop in Stelmine Canada's long position.The idea behind Ford Motor and Stelmine Canada 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.| Stelmine Canada vs. Galantas Gold Corp | Stelmine Canada vs. CANEX Metals | Stelmine Canada vs. Themac Resources Group | Stelmine Canada vs. Magna Terra Minerals |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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