Correlation Between Goodyear Tire and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and Lotus Technology 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 Lotus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goodyear Tire Rubber and Lotus Technology American, you can compare the effects of market volatilities on Goodyear Tire and Lotus Technology 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 Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and Lotus Technology.
Diversification Opportunities for Goodyear Tire and Lotus Technology
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Goodyear and Lotus is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and Lotus Technology American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology American 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 Goodyear Tire Rubber are associated (or correlated) with Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology American has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Lotus Technology go up and down completely randomly.
Pair Corralation between Goodyear Tire and Lotus Technology
Allowing for the 90-day total investment horizon Goodyear Tire Rubber is expected to generate 0.49 times more return on investment than Lotus Technology. However, Goodyear Tire Rubber is 2.06 times less risky than Lotus Technology. It trades about 0.03 of its potential returns per unit of risk. Lotus Technology American is currently generating about -0.08 per unit of risk. If you would invest 930.00 in Goodyear Tire Rubber on January 11, 2025 and sell it today you would earn a total of 8.50 from holding Goodyear Tire Rubber or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. Lotus Technology American
Performance |
| Timeline |
| Goodyear Tire Rubber |
| Lotus Technology American |
Goodyear Tire and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and Lotus Technology
The main advantage of trading using opposite Goodyear Tire and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, Lotus Technology 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 Lotus Technology will offset losses from the drop in Lotus Technology's long position.| Goodyear Tire vs. Allison Transmission Holdings | Goodyear Tire vs. Aptiv PLC | Goodyear Tire vs. LKQ Corporation | Goodyear Tire vs. Lear Corporation |
| Lotus Technology vs. Franklin Wireless Corp | Lotus Technology vs. Flanigans Enterprises | Lotus Technology vs. Chipotle Mexican Grill | Lotus Technology vs. BJs Restaurants |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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