Correlation Between Ford and Ascot Resources

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

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

Diversification Opportunities for Ford and Ascot Resources

0.15

Correlation Coefficient

Ford  Ascot Resources

Average diversification

The 3 months correlation between Ford and Ascot is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Ascot Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascot Resources 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 Ascot Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascot Resources has no effect on the direction of Ford i.e., Ford and Ascot Resources go up and down completely randomly.

Pair Corralation between Ford and Ascot Resources

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.28 times more return on investment than Ascot Resources. However, Ford Motor is 3.53 times less risky than Ascot Resources. It trades about 0.06 of its potential returns per unit of risk. Ascot Resources is currently generating about -0.08 per unit of risk. If you would invest  971.00  in Ford Motor on December 27, 2024 and sell it today you would earn a total of  58.00  from holding Ford Motor or generate 5.97% 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.  Ascot Resources

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.

Ascot Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ascot Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ford and Ascot Resources

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

The idea behind Ford Motor and Ascot Resources 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.