Correlation Between Ford and Vista Gold
Can any of the company-specific risk be diversified away by investing in both Ford and Vista Gold 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 Vista Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Vista Gold, you can compare the effects of market volatilities on Ford and Vista Gold 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 Vista Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Vista Gold.
Diversification Opportunities for Ford and Vista Gold
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Vista is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Vista Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Gold 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 Vista Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Gold has no effect on the direction of Ford i.e., Ford and Vista Gold go up and down completely randomly.
Pair Corralation between Ford and Vista Gold
Taking into account the 90-day investment horizon Ford is expected to generate 3.41 times less return on investment than Vista Gold. But when comparing it to its historical volatility, Ford Motor is 1.72 times less risky than Vista Gold. It trades about 0.03 of its potential returns per unit of risk. Vista Gold is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 77.00 in Vista Gold on September 2, 2024 and sell it today you would earn a total of 8.00 from holding Vista Gold or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Vista Gold
Performance |
| Timeline |
| Ford Motor |
| Vista Gold |
Ford and Vista Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Vista Gold
The main advantage of trading using opposite Ford and Vista Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Vista Gold 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 Vista Gold will offset losses from the drop in Vista Gold's long position.The idea behind Ford Motor and Vista Gold 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.| Vista Gold vs. Trigon Metals | Vista Gold vs. RTG Mining | Vista Gold vs. Seabridge Gold | Vista Gold vs. Fremont 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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