Correlation Between Goodyear Tire and Netflix
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and Netflix 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 Goodyear Tire and Netflix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Goodyear Tire and Netflix, you can compare the effects of market volatilities on Goodyear Tire and Netflix 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 Goodyear Tire with a short position of Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and Netflix.
Diversification Opportunities for Goodyear Tire and Netflix
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Goodyear and Netflix is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Goodyear Tire and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix and Goodyear Tire 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 The Goodyear Tire are associated (or correlated) with Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Netflix go up and down completely randomly.
Pair Corralation between Goodyear Tire and Netflix
Assuming the 90 days horizon Goodyear Tire is expected to generate 11.13 times less return on investment than Netflix. In addition to that, Goodyear Tire is 1.32 times more volatile than Netflix. It trades about 0.01 of its total potential returns per unit of risk. Netflix is currently generating about 0.12 per unit of volatility. If you would invest 574,000 in Netflix on December 6, 2024 and sell it today you would earn a total of 1,257,400 from holding Netflix or generate 219.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Goodyear Tire vs. Netflix
Performance |
| Timeline |
| Goodyear Tire |
| Netflix |
Goodyear Tire and Netflix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and Netflix
The main advantage of trading using opposite Goodyear Tire and Netflix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, Netflix 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 Netflix will offset losses from the drop in Netflix's long position.| Goodyear Tire vs. Prudential Financial | Goodyear Tire vs. Verizon Communications | Goodyear Tire vs. Capital One Financial | Goodyear Tire vs. Deutsche Bank Aktiengesellschaft |
| Netflix vs. Salesforce, | Netflix vs. The Home Depot | Netflix vs. Southern Copper | Netflix vs. Deutsche Bank Aktiengesellschaft |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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