Correlation Between GOODYEAR T and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both GOODYEAR T and LIFENET INSURANCE 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 T and LIFENET INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOODYEAR T RUBBER and LIFENET INSURANCE CO, you can compare the effects of market volatilities on GOODYEAR T and LIFENET INSURANCE 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 T with a short position of LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODYEAR T and LIFENET INSURANCE.
Diversification Opportunities for GOODYEAR T and LIFENET INSURANCE
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GOODYEAR and LIFENET is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE and GOODYEAR T 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 T RUBBER are associated (or correlated) with LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of GOODYEAR T i.e., GOODYEAR T and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between GOODYEAR T and LIFENET INSURANCE
Assuming the 90 days trading horizon GOODYEAR T RUBBER is expected to under-perform the LIFENET INSURANCE. In addition to that, GOODYEAR T is 1.02 times more volatile than LIFENET INSURANCE CO. It trades about -0.05 of its total potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about 0.08 per unit of volatility. If you would invest 720.00 in LIFENET INSURANCE CO on September 20, 2024 and sell it today you would earn a total of 390.00 from holding LIFENET INSURANCE CO or generate 54.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOODYEAR T RUBBER vs. LIFENET INSURANCE CO
Performance |
| Timeline |
| GOODYEAR T RUBBER |
| LIFENET INSURANCE |
GOODYEAR T and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOODYEAR T and LIFENET INSURANCE
The main advantage of trading using opposite GOODYEAR T and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODYEAR T position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.| GOODYEAR T vs. Khiron Life Sciences | GOODYEAR T vs. Eagle Materials | GOODYEAR T vs. ITALIAN WINE BRANDS | GOODYEAR T vs. THRACE PLASTICS |
| LIFENET INSURANCE vs. Xtrackers LevDAX | LIFENET INSURANCE vs. Lyxor 1 | LIFENET INSURANCE vs. Xtrackers ShortDAX |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |