Correlation Between Ford and Greenvale Mining

Can any of the company-specific risk be diversified away by investing in both Ford and Greenvale 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 Greenvale 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 Greenvale Mining Limited, you can compare the effects of market volatilities on Ford and Greenvale 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 Greenvale Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Greenvale Mining.

Diversification Opportunities for Ford and Greenvale Mining

0.03

Correlation Coefficient

Ford  Greenvale Mining

Significant diversification

The 3 months correlation between Ford and Greenvale is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Greenvale Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenvale 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 Greenvale Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenvale Mining has no effect on the direction of Ford i.e., Ford and Greenvale Mining go up and down completely randomly.

Pair Corralation between Ford and Greenvale Mining

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.25 times more return on investment than Greenvale Mining. However, Ford Motor is 3.94 times less risky than Greenvale Mining. It trades about 0.06 of its potential returns per unit of risk. Greenvale Mining Limited is currently generating about -0.13 per unit of risk. If you would invest  957.00  in Ford Motor on December 20, 2024 and sell it today you would earn a total of  60.00  from holding Ford Motor or generate 6.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Ford Motor  vs.  Greenvale Mining Limited

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.

Greenvale Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greenvale Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's primary 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 Greenvale Mining

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

The idea behind Ford Motor and Greenvale Mining Limited 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.