Correlation Between GM and GOODYEAR
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By analyzing existing cross correlation between General Motors and GOODYEAR TIRE RUBR, you can compare the effects of market volatilities on GM and GOODYEAR 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 GM with a short position of GOODYEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and GOODYEAR.
Diversification Opportunities for GM and GOODYEAR
Very good diversification
The 3 months correlation between GM and GOODYEAR is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and GOODYEAR TIRE RUBR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODYEAR TIRE RUBR and GM 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 Motors are associated (or correlated) with GOODYEAR. 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 RUBR has no effect on the direction of GM i.e., GM and GOODYEAR go up and down completely randomly.
Pair Corralation between GM and GOODYEAR
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.01 times more return on investment than GOODYEAR. However, GM is 2.01 times more volatile than GOODYEAR TIRE RUBR. It trades about 0.2 of its potential returns per unit of risk. GOODYEAR TIRE RUBR is currently generating about 0.03 per unit of risk. If you would invest 4,498 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,061 from holding General Motors or generate 23.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 92.86% |
| Values | Daily Returns |
General Motors vs. GOODYEAR TIRE RUBR
Performance |
| Timeline |
| General Motors |
| GOODYEAR TIRE RUBR |
GM and GOODYEAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and GOODYEAR
The main advantage of trading using opposite GM and GOODYEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, GOODYEAR 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 will offset losses from the drop in GOODYEAR's long position.The idea behind General Motors and GOODYEAR TIRE RUBR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| GOODYEAR vs. Western Asset Investment | GOODYEAR vs. Allient | GOODYEAR vs. FARO Technologies | GOODYEAR vs. Radcom |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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