Correlation Between Ford and ZKB Silver
Can any of the company-specific risk be diversified away by investing in both Ford and ZKB Silver 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 ZKB Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and ZKB Silver ETF, you can compare the effects of market volatilities on Ford and ZKB Silver 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 ZKB Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and ZKB Silver.
Diversification Opportunities for Ford and ZKB Silver
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and ZKB is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and ZKB Silver ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Silver ETF 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 ZKB Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Silver ETF has no effect on the direction of Ford i.e., Ford and ZKB Silver go up and down completely randomly.
Pair Corralation between Ford and ZKB Silver
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the ZKB Silver. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.24 times less risky than ZKB Silver. The stock trades about 0.0 of its potential returns per unit of risk. The ZKB Silver ETF is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,314 in ZKB Silver ETF on January 4, 2025 and sell it today you would earn a total of 298.00 from holding ZKB Silver ETF or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. ZKB Silver ETF
Performance |
| Timeline |
| Ford Motor |
| ZKB Silver ETF |
Ford and ZKB Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and ZKB Silver
The main advantage of trading using opposite Ford and ZKB Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, ZKB Silver 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 ZKB Silver will offset losses from the drop in ZKB Silver's long position.The idea behind Ford Motor and ZKB Silver ETF 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.| ZKB Silver vs. ZKB Silver ETF | ZKB Silver vs. ZKB Gold ETF | ZKB Silver vs. ZKB Gold ETF | ZKB Silver vs. ZKB Platinum ETF |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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