Correlation Between Ford and Alamos Gold

Can any of the company-specific risk be diversified away by investing in both Ford and Alamos 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 Alamos 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 Alamos Gold, you can compare the effects of market volatilities on Ford and Alamos 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 Alamos Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Alamos Gold.

Diversification Opportunities for Ford and Alamos Gold

0.18

Correlation Coefficient

Ford  Alamos Gold

Average diversification

The 3 months correlation between Ford and Alamos is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Alamos Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamos 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 Alamos Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamos Gold has no effect on the direction of Ford i.e., Ford and Alamos Gold go up and down completely randomly.

Pair Corralation between Ford and Alamos Gold

Taking into account the 90-day investment horizon Ford is expected to generate 11.46 times less return on investment than Alamos Gold. In addition to that, Ford is 1.05 times more volatile than Alamos Gold. It trades about 0.03 of its total potential returns per unit of risk. Alamos Gold is currently generating about 0.31 per unit of volatility. If you would invest  2,644  in Alamos Gold on December 27, 2024 and sell it today you would earn a total of  1,178  from holding Alamos Gold or generate 44.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Ford Motor  vs.  Alamos Gold

Ford Motor

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Alamos Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alamos Gold are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Alamos Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Alamos Gold

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

The idea behind Ford Motor and Alamos 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.