Correlation Between Goodyear Tire and Miller Industries
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and Miller Industries 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 Miller Industries 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 Miller Industries, you can compare the effects of market volatilities on Goodyear Tire and Miller Industries 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 Miller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and Miller Industries.
Diversification Opportunities for Goodyear Tire and Miller Industries
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Goodyear and Miller is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and Miller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Industries 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 Miller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Industries has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Miller Industries go up and down completely randomly.
Pair Corralation between Goodyear Tire and Miller Industries
Allowing for the 90-day total investment horizon Goodyear Tire is expected to generate 5.88 times less return on investment than Miller Industries. In addition to that, Goodyear Tire is 1.1 times more volatile than Miller Industries. It trades about 0.03 of its total potential returns per unit of risk. Miller Industries is currently generating about 0.2 per unit of volatility. If you would invest 6,536 in Miller Industries on November 1, 2024 and sell it today you would earn a total of 429.50 from holding Miller Industries or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. Miller Industries
Performance |
| Timeline |
| Goodyear Tire Rubber |
| Miller Industries |
Goodyear Tire and Miller Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and Miller Industries
The main advantage of trading using opposite Goodyear Tire and Miller Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, Miller Industries 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 Miller Industries will offset losses from the drop in Miller Industries' long position.| Goodyear Tire vs. Allison Transmission Holdings | Goodyear Tire vs. Aptiv PLC | Goodyear Tire vs. LKQ Corporation | Goodyear Tire vs. Lear Corporation |
| Miller Industries vs. Dorman Products | Miller Industries vs. Standard Motor Products | Miller Industries vs. Motorcar Parts of | Miller Industries vs. Douglas Dynamics |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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