Correlation Between Ford and CoinSmart Financial

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

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

Diversification Opportunities for Ford and CoinSmart Financial

0.0

Correlation Coefficient

Ford  CoinSmart Financial

Pay attention - limited upside

The 3 months correlation between Ford and CoinSmart is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CoinSmart Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoinSmart Financial 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 CoinSmart Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoinSmart Financial has no effect on the direction of Ford i.e., Ford and CoinSmart Financial go up and down completely randomly.

Pair Corralation between Ford and CoinSmart Financial

Taking into account the 90-day investment horizon Ford is expected to generate 8.24 times less return on investment than CoinSmart Financial. But when comparing it to its historical volatility, Ford Motor is 1.77 times less risky than CoinSmart Financial. It trades about 0.01 of its potential returns per unit of risk. CoinSmart Financial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  11.00  in CoinSmart Financial on September 23, 2024 and sell it today you would earn a total of  11.00  from holding CoinSmart Financial or generate 100.0% return on investment over 90 days.

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

Ford Motor  vs.  CoinSmart Financial

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.

CoinSmart Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CoinSmart Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CoinSmart Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ford and CoinSmart Financial

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

The idea behind Ford Motor and CoinSmart Financial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.