Correlation Between Ford and Minehub Technologies
Can any of the company-specific risk be diversified away by investing in both Ford and Minehub Technologies 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 Minehub Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Minehub Technologies, you can compare the effects of market volatilities on Ford and Minehub Technologies 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 Minehub Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Minehub Technologies.
Diversification Opportunities for Ford and Minehub Technologies
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ford and Minehub is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Minehub Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minehub Technologies 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 Minehub Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minehub Technologies has no effect on the direction of Ford i.e., Ford and Minehub Technologies go up and down completely randomly.
Pair Corralation between Ford and Minehub Technologies
Taking into account the 90-day investment horizon Ford is expected to generate 12.0 times less return on investment than Minehub Technologies. But when comparing it to its historical volatility, Ford Motor is 3.9 times less risky than Minehub Technologies. It trades about 0.06 of its potential returns per unit of risk. Minehub Technologies is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Minehub Technologies on December 20, 2024 and sell it today you would earn a total of 29.00 from holding Minehub Technologies or generate 103.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Ford Motor vs. Minehub Technologies
Performance |
| Timeline |
| Ford Motor |
| Minehub Technologies |
Ford and Minehub Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Minehub Technologies
The main advantage of trading using opposite Ford and Minehub Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Minehub Technologies 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 Minehub Technologies will offset losses from the drop in Minehub Technologies' long position.The idea behind Ford Motor and Minehub Technologies 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.The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Minehub Technologies as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Minehub Technologies' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Minehub Technologies' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Minehub Technologies.
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |