Correlation Between Goodyear Tire and National Storage
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and National Storage 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 National Storage 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 National Storage Affiliates, you can compare the effects of market volatilities on Goodyear Tire and National Storage 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 National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and National Storage.
Diversification Opportunities for Goodyear Tire and National Storage
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goodyear and National is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and National Storage Affiliates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage Aff 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 National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage Aff has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and National Storage go up and down completely randomly.
Pair Corralation between Goodyear Tire and National Storage
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to generate 1.64 times more return on investment than National Storage. However, Goodyear Tire is 1.64 times more volatile than National Storage Affiliates. It trades about 0.25 of its potential returns per unit of risk. National Storage Affiliates is currently generating about 0.08 per unit of risk. If you would invest 777.00 in Goodyear Tire Rubber on August 25, 2024 and sell it today you would earn a total of 159.00 from holding Goodyear Tire Rubber or generate 20.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. National Storage Affiliates
Performance |
| Timeline |
| Goodyear Tire Rubber |
| National Storage Aff |
Goodyear Tire and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and National Storage
The main advantage of trading using opposite Goodyear Tire and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, National Storage 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 National Storage will offset losses from the drop in National Storage's long position.| Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc |
| National Storage vs. Superior Plus Corp | National Storage vs. Origin Agritech | National Storage vs. Identiv | National Storage vs. INTUITIVE SURGICAL |
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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