Correlation Between GOODYEAR T and American International
Can any of the company-specific risk be diversified away by investing in both GOODYEAR T and American International 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 American International 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 American International Group, you can compare the effects of market volatilities on GOODYEAR T and American International 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 American International. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODYEAR T and American International.
Diversification Opportunities for GOODYEAR T and American International
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GOODYEAR and American is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER and American International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American International 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 American International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American International has no effect on the direction of GOODYEAR T i.e., GOODYEAR T and American International go up and down completely randomly.
Pair Corralation between GOODYEAR T and American International
Assuming the 90 days trading horizon GOODYEAR T RUBBER is expected to generate 2.56 times more return on investment than American International. However, GOODYEAR T is 2.56 times more volatile than American International Group. It trades about 0.08 of its potential returns per unit of risk. American International Group is currently generating about -0.07 per unit of risk. If you would invest 922.00 in GOODYEAR T RUBBER on September 12, 2024 and sell it today you would earn a total of 41.00 from holding GOODYEAR T RUBBER or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
GOODYEAR T RUBBER vs. American International Group
Performance |
| Timeline |
| GOODYEAR T RUBBER |
| American International |
GOODYEAR T and American International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOODYEAR T and American International
The main advantage of trading using opposite GOODYEAR T and American International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODYEAR T position performs unexpectedly, American International 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 American International will offset losses from the drop in American International's long position.| GOODYEAR T vs. Lion One Metals | GOODYEAR T vs. National Health Investors | GOODYEAR T vs. ATRYS HEALTH SA | GOODYEAR T vs. Platinum Investment Management |
| American International vs. Zurich Insurance Group | American International vs. Superior Plus Corp | American International vs. SIVERS SEMICONDUCTORS AB | American International vs. CHINA HUARONG ENERHD 50 |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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