Correlation Between Materialise and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both Materialise and Goodyear Tire 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 Materialise and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materialise NV and Goodyear Tire Rubber, you can compare the effects of market volatilities on Materialise and Goodyear Tire 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 Materialise with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and Goodyear Tire.
Diversification Opportunities for Materialise and Goodyear Tire
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Materialise and Goodyear is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Goodyear Tire Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Tire Rubber and Materialise 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 Materialise NV are associated (or correlated) with Goodyear Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodyear Tire Rubber has no effect on the direction of Materialise i.e., Materialise and Goodyear Tire go up and down completely randomly.
Pair Corralation between Materialise and Goodyear Tire
Assuming the 90 days trading horizon Materialise NV is expected to generate 1.33 times more return on investment than Goodyear Tire. However, Materialise is 1.33 times more volatile than Goodyear Tire Rubber. It trades about 0.16 of its potential returns per unit of risk. Goodyear Tire Rubber is currently generating about 0.11 per unit of risk. If you would invest 496.00 in Materialise NV on August 25, 2024 and sell it today you would earn a total of 204.00 from holding Materialise NV or generate 41.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Materialise NV vs. Goodyear Tire Rubber
Performance |
| Timeline |
| Materialise NV |
| Goodyear Tire Rubber |
Materialise and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materialise and Goodyear Tire
The main advantage of trading using opposite Materialise and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, Goodyear Tire 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 Goodyear Tire will offset losses from the drop in Goodyear Tire's long position.| Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc |
| Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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