Correlation Between Gladstone Investment and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment 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 Gladstone Investment and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and Goodyear Tire Rubber, you can compare the effects of market volatilities on Gladstone Investment 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 Gladstone Investment with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and Goodyear Tire.
Diversification Opportunities for Gladstone Investment and Goodyear Tire
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gladstone and Goodyear is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment i.e., Gladstone Investment and Goodyear Tire go up and down completely randomly.
Pair Corralation between Gladstone Investment and Goodyear Tire
Assuming the 90 days horizon Gladstone Investment is expected to generate 63.68 times less return on investment than Goodyear Tire. But when comparing it to its historical volatility, Gladstone Investment is 1.64 times less risky than Goodyear Tire. It trades about 0.01 of its potential returns per unit of risk. Goodyear Tire Rubber is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 751.00 in Goodyear Tire Rubber on August 31, 2024 and sell it today you would earn a total of 246.00 from holding Goodyear Tire Rubber or generate 32.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Gladstone Investment vs. Goodyear Tire Rubber
Performance |
| Timeline |
| Gladstone Investment |
| Goodyear Tire Rubber |
Gladstone Investment and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and Goodyear Tire
The main advantage of trading using opposite Gladstone Investment and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment 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.| Gladstone Investment vs. QUEEN S ROAD | Gladstone Investment vs. Air Transport Services | Gladstone Investment vs. Gold Road Resources | Gladstone Investment vs. GOLD ROAD RES |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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