Correlation Between JAPFA COMFEED and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both JAPFA COMFEED 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 JAPFA COMFEED and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPFA FEED A and Goodyear Tire Rubber, you can compare the effects of market volatilities on JAPFA COMFEED 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 JAPFA COMFEED with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPFA COMFEED and Goodyear Tire.
Diversification Opportunities for JAPFA COMFEED and Goodyear Tire
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JAPFA and Goodyear is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding JAPFA FEED A 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 JAPFA COMFEED 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 JAPFA FEED A 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 JAPFA COMFEED i.e., JAPFA COMFEED and Goodyear Tire go up and down completely randomly.
Pair Corralation between JAPFA COMFEED and Goodyear Tire
Assuming the 90 days trading horizon JAPFA COMFEED is expected to generate 1.56 times less return on investment than Goodyear Tire. But when comparing it to its historical volatility, JAPFA FEED A is 1.39 times less risky than Goodyear Tire. It trades about 0.22 of its potential returns per unit of risk. Goodyear Tire Rubber is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 745.00 in Goodyear Tire Rubber on September 3, 2024 and sell it today you would earn a total of 252.00 from holding Goodyear Tire Rubber or generate 33.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAPFA FEED A vs. Goodyear Tire Rubber
Performance |
| Timeline |
| JAPFA COMFEED |
| Goodyear Tire Rubber |
JAPFA COMFEED and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPFA COMFEED and Goodyear Tire
The main advantage of trading using opposite JAPFA COMFEED and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPFA COMFEED 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.| JAPFA COMFEED vs. Goodyear Tire Rubber | JAPFA COMFEED vs. THRACE PLASTICS | JAPFA COMFEED vs. CANON MARKETING JP | JAPFA COMFEED vs. VULCAN MATERIALS |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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