Correlation Between Ford and Aris Mining

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

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

Diversification Opportunities for Ford and Aris Mining

0.11

Correlation Coefficient

Ford  Aris Mining

Average diversification

The 3 months correlation between Ford and Aris is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Aris Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Mining 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 Aris Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Mining has no effect on the direction of Ford i.e., Ford and Aris Mining go up and down completely randomly.

Pair Corralation between Ford and Aris Mining

Taking into account the 90-day investment horizon Ford is expected to generate 4.22 times less return on investment than Aris Mining. But when comparing it to its historical volatility, Ford Motor is 1.49 times less risky than Aris Mining. It trades about 0.05 of its potential returns per unit of risk. Aris Mining is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  358.00  in Aris Mining on December 25, 2024 and sell it today you would earn a total of  95.00  from holding Aris Mining or generate 26.54% 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.  Aris Mining

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.

Aris Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aris Mining are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting primary indicators, Aris Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Aris Mining

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

The idea behind Ford Motor and Aris Mining 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.