Correlation Between American Eagle and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both American Eagle 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 American Eagle and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Eagle Outfitters and The Goodyear Tire, you can compare the effects of market volatilities on American Eagle 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 American Eagle with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Goodyear Tire.
Diversification Opportunities for American Eagle and Goodyear Tire
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Goodyear is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and The Goodyear Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Tire and American Eagle 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 American Eagle Outfitters 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 has no effect on the direction of American Eagle i.e., American Eagle and Goodyear Tire go up and down completely randomly.
Pair Corralation between American Eagle and Goodyear Tire
Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the Goodyear Tire. But the stock apears to be less risky and, when comparing its historical volatility, American Eagle Outfitters is 1.1 times less risky than Goodyear Tire. The stock trades about -0.03 of its potential returns per unit of risk. The The Goodyear Tire is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,074 in The Goodyear Tire on September 1, 2024 and sell it today you would lose (53.00) from holding The Goodyear Tire or give up 4.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.48% |
| Values | Daily Returns |
American Eagle Outfitters vs. The Goodyear Tire
Performance |
| Timeline |
| American Eagle Outfitters |
| Goodyear Tire |
American Eagle and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Goodyear Tire
The main advantage of trading using opposite American Eagle and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle 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.| American Eagle vs. LPKF Laser Electronics | American Eagle vs. AOI Electronics Co | American Eagle vs. CITY OFFICE REIT | American Eagle vs. ARROW ELECTRONICS |
| Goodyear Tire vs. SENECA FOODS A | Goodyear Tire vs. United Natural Foods | Goodyear Tire vs. National Storage Affiliates | Goodyear Tire vs. UNITED UTILITIES GR |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |