Correlation Between Ford and Black Dragon

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

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

Diversification Opportunities for Ford and Black Dragon

0.0

Correlation Coefficient

Ford  Black Dragon

Pay attention - limited upside

The 3 months correlation between Ford and Black is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Black Dragon Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Dragon Resource 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 Black Dragon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Dragon Resource has no effect on the direction of Ford i.e., Ford and Black Dragon go up and down completely randomly.

Pair Corralation between Ford and Black Dragon

If you would invest  990.00  in Ford Motor on October 22, 2024 and sell it today you would earn a total of  28.00  from holding Ford Motor or generate 2.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Ford Motor  vs.  Black Dragon Resource

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 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.

Black Dragon Resource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Dragon Resource has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Black Dragon is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ford and Black Dragon

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

The idea behind Ford Motor and Black Dragon Resource 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.

Check out your portfolio center.

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.