Correlation Between Ford and SILVER BULLET

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

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

Diversification Opportunities for Ford and SILVER BULLET

-0.56

Correlation Coefficient

Ford  SILVER BULLET

Excellent diversification

The 3 months correlation between Ford and SILVER is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and SILVER BULLET DATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SILVER BULLET DATA 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 SILVER BULLET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SILVER BULLET DATA has no effect on the direction of Ford i.e., Ford and SILVER BULLET go up and down completely randomly.

Pair Corralation between Ford and SILVER BULLET

Taking into account the 90-day investment horizon Ford is expected to generate 13.48 times less return on investment than SILVER BULLET. But when comparing it to its historical volatility, Ford Motor is 2.53 times less risky than SILVER BULLET. It trades about 0.0 of its potential returns per unit of risk. SILVER BULLET DATA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  78.00  in SILVER BULLET DATA on October 11, 2024 and sell it today you would lose (7.00) from holding SILVER BULLET DATA or give up 8.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.0%
Values	Daily Returns

Ford Motor  vs.  SILVER BULLET DATA

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SILVER BULLET DATA

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SILVER BULLET DATA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SILVER BULLET reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and SILVER BULLET

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

The idea behind Ford Motor and SILVER BULLET DATA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.