Correlation Between Ford and GREEN MINERALS

Can any of the company-specific risk be diversified away by investing in both Ford and GREEN MINERALS 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 GREEN MINERALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ford Motor and GREEN MINERALS NK, you can compare the effects of market volatilities on Ford and GREEN MINERALS 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 GREEN MINERALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and GREEN MINERALS.

Diversification Opportunities for Ford and GREEN MINERALS

0.25

Correlation Coefficient

Ford  GREEN MINERALS

Modest diversification

The 3 months correlation between Ford and GREEN is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and GREEN MINERALS NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREEN MINERALS NK 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 GREEN MINERALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREEN MINERALS NK has no effect on the direction of Ford i.e., Ford and GREEN MINERALS go up and down completely randomly.

Pair Corralation between Ford and GREEN MINERALS

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.22 times more return on investment than GREEN MINERALS. However, Ford Motor is 4.55 times less risky than GREEN MINERALS. It trades about 0.06 of its potential returns per unit of risk. GREEN MINERALS NK is currently generating about 0.01 per unit of risk. If you would invest  943.00  in Ford Motor on December 19, 2024 and sell it today you would earn a total of  52.00  from holding Ford Motor or generate 5.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  GREEN MINERALS NK

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Ford may actually be approaching a critical reversion point that can send shares even higher in April 2025.

GREEN MINERALS NK

Risk-Adjusted Performance

Very Weak

Over the last 90 days GREEN MINERALS NK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GREEN MINERALS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ford and GREEN MINERALS

The main advantage of trading using opposite Ford and GREEN MINERALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, GREEN MINERALS 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 GREEN MINERALS will offset losses from the drop in GREEN MINERALS's long position.

The idea behind Ford Motor and GREEN MINERALS NK 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.