Correlation Between Ford and Antofagasta Plc

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

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

Diversification Opportunities for Ford and Antofagasta Plc

-0.37

Correlation Coefficient

Ford  Antofagasta Plc

Very good diversification

The 3 months correlation between Ford and Antofagasta is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Antofagasta plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta plc 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 Antofagasta Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta plc has no effect on the direction of Ford i.e., Ford and Antofagasta Plc go up and down completely randomly.

Pair Corralation between Ford and Antofagasta Plc

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Antofagasta Plc. But the stock apears to be less risky and, when comparing its historical volatility, Ford Motor is 1.01 times less risky than Antofagasta Plc. The stock trades about -0.02 of its potential returns per unit of risk. The Antofagasta plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,929  in Antofagasta plc on September 20, 2024 and sell it today you would earn a total of  88.00  from holding Antofagasta plc or generate 4.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Ford Motor  vs.  Antofagasta plc

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 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.

Antofagasta plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antofagasta plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ford and Antofagasta Plc

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

The idea behind Ford Motor and Antofagasta plc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.