Correlation Between DFS Furniture and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both DFS Furniture 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 DFS Furniture and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Goodyear Tire Rubber, you can compare the effects of market volatilities on DFS Furniture 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 DFS Furniture with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Goodyear Tire.
Diversification Opportunities for DFS Furniture and Goodyear Tire
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DFS and Goodyear is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC 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 DFS Furniture 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 DFS Furniture PLC 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 DFS Furniture i.e., DFS Furniture and Goodyear Tire go up and down completely randomly.
Pair Corralation between DFS Furniture and Goodyear Tire
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 1.26 times more return on investment than Goodyear Tire. However, DFS Furniture is 1.26 times more volatile than Goodyear Tire Rubber. It trades about -0.13 of its potential returns per unit of risk. Goodyear Tire Rubber is currently generating about -0.24 per unit of risk. If you would invest 166.00 in DFS Furniture PLC on October 14, 2024 and sell it today you would lose (13.00) from holding DFS Furniture PLC or give up 7.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Goodyear Tire Rubber
Performance |
| Timeline |
| DFS Furniture PLC |
| Goodyear Tire Rubber |
DFS Furniture and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Goodyear Tire
The main advantage of trading using opposite DFS Furniture and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture 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.| DFS Furniture vs. OFFICE DEPOT | DFS Furniture vs. ORMAT TECHNOLOGIES | DFS Furniture vs. ACCSYS TECHPLC EO | DFS Furniture vs. alstria office REIT AG |
| Goodyear Tire vs. DFS Furniture PLC | Goodyear Tire vs. UNIVERSAL MUSIC GROUP | Goodyear Tire vs. alstria office REIT AG | Goodyear Tire vs. OFFICE DEPOT |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |