Correlation Between Goodyear Tire and Thor Industries
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and Thor 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 Thor 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 Thor Industries, you can compare the effects of market volatilities on Goodyear Tire and Thor 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 Thor Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and Thor Industries.
Diversification Opportunities for Goodyear Tire and Thor Industries
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goodyear and Thor is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and Thor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor 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 Thor Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Industries has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Thor Industries go up and down completely randomly.
Pair Corralation between Goodyear Tire and Thor Industries
Allowing for the 90-day total investment horizon Goodyear Tire Rubber is expected to generate 1.75 times more return on investment than Thor Industries. However, Goodyear Tire is 1.75 times more volatile than Thor Industries. It trades about 0.23 of its potential returns per unit of risk. Thor Industries is currently generating about 0.2 per unit of risk. If you would invest 853.00 in Goodyear Tire Rubber on August 28, 2024 and sell it today you would earn a total of 160.00 from holding Goodyear Tire Rubber or generate 18.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. Thor Industries
Performance |
| Timeline |
| Goodyear Tire Rubber |
| Thor Industries |
Goodyear Tire and Thor Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and Thor Industries
The main advantage of trading using opposite Goodyear Tire and Thor Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, Thor 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 Thor Industries will offset losses from the drop in Thor Industries' long position.| Goodyear Tire vs. Allison Transmission Holdings | Goodyear Tire vs. Aptiv PLC | Goodyear Tire vs. LKQ Corporation | Goodyear Tire vs. Lear Corporation |
| Thor Industries vs. Nio Class A | Thor Industries vs. Lucid Group | Thor Industries vs. Tesla Inc | Thor Industries vs. Mullen Automotive |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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