Correlation Between Ford and Surge Battery

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

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

Diversification Opportunities for Ford and Surge Battery

0.16

Correlation Coefficient

Ford  Surge Battery

Average diversification

The 3 months correlation between Ford and Surge is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Surge Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Battery Metals 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 Surge Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Battery Metals has no effect on the direction of Ford i.e., Ford and Surge Battery go up and down completely randomly.

Pair Corralation between Ford and Surge Battery

Taking into account the 90-day investment horizon Ford is expected to generate 9.52 times less return on investment than Surge Battery. But when comparing it to its historical volatility, Ford Motor is 2.52 times less risky than Surge Battery. It trades about 0.02 of its potential returns per unit of risk. Surge Battery Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Surge Battery Metals on September 5, 2024 and sell it today you would earn a total of  7.00  from holding Surge Battery Metals or generate 23.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ford Motor  vs.  Surge Battery Metals

Ford Motor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Surge Battery Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Surge Battery Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Surge Battery showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and Surge Battery

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

The idea behind Ford Motor and Surge Battery Metals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.