Correlation Between General Dynamics and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both General Dynamics 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 General Dynamics and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Dynamics and Goodyear Tire Rubber, you can compare the effects of market volatilities on General Dynamics 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 General Dynamics with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Goodyear Tire.
Diversification Opportunities for General Dynamics and Goodyear Tire
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between General and Goodyear is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics 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 General Dynamics 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 General Dynamics 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 General Dynamics i.e., General Dynamics and Goodyear Tire go up and down completely randomly.
Pair Corralation between General Dynamics and Goodyear Tire
Assuming the 90 days horizon General Dynamics is expected to generate 0.48 times more return on investment than Goodyear Tire. However, General Dynamics is 2.08 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 -0.01 per unit of risk. If you would invest 26,660 in General Dynamics on September 3, 2024 and sell it today you would earn a total of 235.00 from holding General Dynamics or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Dynamics vs. Goodyear Tire Rubber
Performance |
| Timeline |
| General Dynamics |
| Goodyear Tire Rubber |
General Dynamics and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Dynamics and Goodyear Tire
The main advantage of trading using opposite General Dynamics and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics 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.| General Dynamics vs. GREENX METALS LTD | General Dynamics vs. CODERE ONLINE LUX | General Dynamics vs. NXP Semiconductors NV | General Dynamics vs. Jacquet Metal Service |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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