Correlation Between Ford and Thor Explorations
Can any of the company-specific risk be diversified away by investing in both Ford and Thor Explorations 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 Thor Explorations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Thor Explorations, you can compare the effects of market volatilities on Ford and Thor Explorations 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 Thor Explorations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Thor Explorations.
Diversification Opportunities for Ford and Thor Explorations
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Thor is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Thor Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Explorations 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 Thor Explorations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Explorations has no effect on the direction of Ford i.e., Ford and Thor Explorations go up and down completely randomly.
Pair Corralation between Ford and Thor Explorations
Taking into account the 90-day investment horizon Ford is expected to generate 1.77 times less return on investment than Thor Explorations. But when comparing it to its historical volatility, Ford Motor is 1.52 times less risky than Thor Explorations. It trades about 0.03 of its potential returns per unit of risk. Thor Explorations is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Thor Explorations on August 25, 2024 and sell it today you would earn a total of 5.00 from holding Thor Explorations or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ford Motor vs. Thor Explorations
Performance |
| Timeline |
| Ford Motor |
| Thor Explorations |
Ford and Thor Explorations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Thor Explorations
The main advantage of trading using opposite Ford and Thor Explorations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Thor Explorations 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 Thor Explorations will offset losses from the drop in Thor Explorations' long position.The idea behind Ford Motor and Thor Explorations 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.| Thor Explorations vs. First Majestic Silver | Thor Explorations vs. Ivanhoe Energy | Thor Explorations vs. Orezone Gold Corp | Thor Explorations vs. Faraday Copper Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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