Correlation Between Ford and Generation Mining
Can any of the company-specific risk be diversified away by investing in both Ford and Generation Mining 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 Generation Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Generation Mining Limited, you can compare the effects of market volatilities on Ford and Generation Mining 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 Generation Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Generation Mining.
Diversification Opportunities for Ford and Generation Mining
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ford and Generation is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Generation Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Mining 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 Generation Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Mining has no effect on the direction of Ford i.e., Ford and Generation Mining go up and down completely randomly.
Pair Corralation between Ford and Generation Mining
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.38 times more return on investment than Generation Mining. However, Ford Motor is 2.62 times less risky than Generation Mining. It trades about 0.01 of its potential returns per unit of risk. Generation Mining Limited is currently generating about 0.0 per unit of risk. If you would invest 1,109 in Ford Motor on July 24, 2024 and sell it today you would lose (21.00) from holding Ford Motor or give up 1.89% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ford Motor vs. Generation Mining Limited
Performance |
Timeline |
Ford Motor |
Generation Mining |
Ford and Generation Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and Generation Mining
The main advantage of trading using opposite Ford and Generation Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Generation Mining 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 Generation Mining will offset losses from the drop in Generation Mining's long position.The idea behind Ford Motor and Generation Mining Limited 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.Generation Mining vs. Altius Minerals | Generation Mining vs. EMX Royalty Corp | Generation Mining vs. Ivanhoe Mines | Generation Mining vs. Rio Tinto ADR |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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