Correlation Between Ford and EnCore Energy

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

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

Diversification Opportunities for Ford and EnCore Energy

0.0

Correlation Coefficient

Ford  EnCore Energy

Pay attention - limited upside

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

Pair Corralation between Ford and EnCore Energy

Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.74 times more return on investment than EnCore Energy. However, Ford Motor is 1.36 times less risky than EnCore Energy. It trades about 0.14 of its potential returns per unit of risk. enCore Energy Corp is currently generating about 0.04 per unit of risk. If you would invest  1,022  in Ford Motor on September 5, 2024 and sell it today you would earn a total of  60.00  from holding Ford Motor or generate 5.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Ford Motor  vs.  enCore Energy Corp

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.

enCore Energy Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in enCore Energy Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EnCore Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ford and EnCore Energy

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

The idea behind Ford Motor and enCore Energy Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.