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

0.02

Correlation Coefficient

Ford  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

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 weak 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.

CI Gold Bullion

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Gold Bullion are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak essential indicators, CI Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

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.