Correlation Between Ford and CI Gold
Can any of the company-specific risk be diversified away by investing in both Ford and CI Gold 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 CI Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and CI Gold Bullion, you can compare the effects of market volatilities on Ford and CI Gold 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 CI Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and CI Gold.
Diversification Opportunities for Ford and CI Gold
Significant diversification
The 3 months correlation between Ford and VALT-B is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and CI Gold Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Gold Bullion 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 CI Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Gold Bullion has no effect on the direction of Ford i.e., Ford and CI Gold go up and down completely randomly.
Pair Corralation between Ford and CI Gold
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the CI Gold. In addition to that, Ford is 2.78 times more volatile than CI Gold Bullion. It trades about 0.0 of its total potential returns per unit of risk. CI Gold Bullion is currently generating about 0.13 per unit of volatility. If you would invest 2,720 in CI Gold Bullion on September 19, 2024 and sell it today you would earn a total of 1,001 from holding CI Gold Bullion or generate 36.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 99.66% |
Values | Daily Returns |
Ford Motor vs. CI Gold Bullion
Performance |
Timeline |
Ford Motor |
CI Gold Bullion |
Ford and CI Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and CI Gold
The main advantage of trading using opposite Ford and CI Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, CI Gold 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 CI Gold will offset losses from the drop in CI Gold's long position.The idea behind Ford Motor and CI Gold Bullion 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.CI Gold vs. RBC Select Balanced | CI Gold vs. RBC Portefeuille de | CI Gold vs. Edgepoint Global Portfolio | CI Gold vs. TD Comfort Balanced |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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