Correlation Between Goodyear Tire and Polyplex (Thailand)
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and Polyplex (Thailand) 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 Polyplex (Thailand) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Goodyear Tire and Polyplex Public, you can compare the effects of market volatilities on Goodyear Tire and Polyplex (Thailand) 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 Polyplex (Thailand). Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and Polyplex (Thailand).
Diversification Opportunities for Goodyear Tire and Polyplex (Thailand)
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goodyear and Polyplex is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Goodyear Tire and Polyplex Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polyplex (Thailand) 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 The Goodyear Tire are associated (or correlated) with Polyplex (Thailand). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polyplex (Thailand) has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Polyplex (Thailand) go up and down completely randomly.
Pair Corralation between Goodyear Tire and Polyplex (Thailand)
Assuming the 90 days horizon Goodyear Tire is expected to generate 3.93 times less return on investment than Polyplex (Thailand). But when comparing it to its historical volatility, The Goodyear Tire is 6.59 times less risky than Polyplex (Thailand). It trades about 0.36 of its potential returns per unit of risk. Polyplex Public is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Polyplex Public on September 1, 2024 and sell it today you would earn a total of 19.00 from holding Polyplex Public or generate 135.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Goodyear Tire vs. Polyplex Public
Performance |
| Timeline |
| Goodyear Tire |
| Polyplex (Thailand) |
Goodyear Tire and Polyplex (Thailand) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and Polyplex (Thailand)
The main advantage of trading using opposite Goodyear Tire and Polyplex (Thailand) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, Polyplex (Thailand) 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 Polyplex (Thailand) will offset losses from the drop in Polyplex (Thailand)'s long position.| Goodyear Tire vs. SENECA FOODS A | Goodyear Tire vs. United Natural Foods | Goodyear Tire vs. National Storage Affiliates | Goodyear Tire vs. UNITED UTILITIES GR |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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