Correlation Between Fox Factory and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both Fox Factory 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 Fox Factory and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fox Factory Holding and Goodyear Tire Rubber, you can compare the effects of market volatilities on Fox Factory 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 Fox Factory with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fox Factory and Goodyear Tire.
Diversification Opportunities for Fox Factory and Goodyear Tire
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fox and Goodyear is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding 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 Fox Factory 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 Fox Factory Holding 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 Fox Factory i.e., Fox Factory and Goodyear Tire go up and down completely randomly.
Pair Corralation between Fox Factory and Goodyear Tire
Given the investment horizon of 90 days Fox Factory Holding is expected to under-perform the Goodyear Tire. But the stock apears to be less risky and, when comparing its historical volatility, Fox Factory Holding is 1.46 times less risky than Goodyear Tire. The stock trades about -0.2 of its potential returns per unit of risk. The Goodyear Tire Rubber is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 853.00 in Goodyear Tire Rubber on August 27, 2024 and sell it today you would earn a total of 160.00 from holding Goodyear Tire Rubber or generate 18.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fox Factory Holding vs. Goodyear Tire Rubber
Performance |
| Timeline |
| Fox Factory Holding |
| Goodyear Tire Rubber |
Fox Factory and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fox Factory and Goodyear Tire
The main advantage of trading using opposite Fox Factory and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fox Factory 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.| Fox Factory vs. Dorman Products | Fox Factory vs. Malibu Boats | Fox Factory vs. Installed Building Products | Fox Factory vs. ExlService Holdings |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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