Correlation Between Goodyear Tire and SANOK RUBBER
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and SANOK RUBBER 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 SANOK RUBBER 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 SANOK RUBBER ZY, you can compare the effects of market volatilities on Goodyear Tire and SANOK RUBBER 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 SANOK RUBBER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and SANOK RUBBER.
Diversification Opportunities for Goodyear Tire and SANOK RUBBER
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Goodyear and SANOK is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and SANOK RUBBER ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOK RUBBER ZY 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 SANOK RUBBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOK RUBBER ZY has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and SANOK RUBBER go up and down completely randomly.
Pair Corralation between Goodyear Tire and SANOK RUBBER
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to generate 3.88 times more return on investment than SANOK RUBBER. However, Goodyear Tire is 3.88 times more volatile than SANOK RUBBER ZY. It trades about 0.41 of its potential returns per unit of risk. SANOK RUBBER ZY is currently generating about 0.04 per unit of risk. If you would invest 746.00 in Goodyear Tire Rubber on September 3, 2024 and sell it today you would earn a total of 251.00 from holding Goodyear Tire Rubber or generate 33.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. SANOK RUBBER ZY
Performance |
| Timeline |
| Goodyear Tire Rubber |
| SANOK RUBBER ZY |
Goodyear Tire and SANOK RUBBER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and SANOK RUBBER
The main advantage of trading using opposite Goodyear Tire and SANOK RUBBER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, SANOK RUBBER 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 SANOK RUBBER will offset losses from the drop in SANOK RUBBER's long position.| Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc |
| SANOK RUBBER vs. Cal Maine Foods | SANOK RUBBER vs. G III Apparel Group | SANOK RUBBER vs. Meli Hotels International | SANOK RUBBER vs. INTERCONT HOTELS |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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