Correlation Between Ford and Digihost Technology

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

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

Diversification Opportunities for Ford and Digihost Technology

-0.17

Correlation Coefficient

Ford  Digihost Technology

Good diversification

The 3 months correlation between Ford and Digihost is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Digihost Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digihost Technology 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 Digihost Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digihost Technology has no effect on the direction of Ford i.e., Ford and Digihost Technology go up and down completely randomly.

Pair Corralation between Ford and Digihost Technology

Taking into account the 90-day investment horizon Ford is expected to generate 2.15 times less return on investment than Digihost Technology. But when comparing it to its historical volatility, Ford Motor is 5.16 times less risky than Digihost Technology. It trades about 0.04 of its potential returns per unit of risk. Digihost Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  157.00  in Digihost Technology on December 2, 2024 and sell it today you would lose (18.00) from holding Digihost Technology or give up 11.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ford Motor  vs.  Digihost Technology

Ford Motor

Risk-Adjusted Performance

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 unfluctuating 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.

Digihost Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digihost Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Ford and Digihost Technology

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

The idea behind Ford Motor and Digihost Technology 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.