Correlation Between Goodyear Tire and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and Macquarie Group 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 Macquarie Group 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 Macquarie Group Limited, you can compare the effects of market volatilities on Goodyear Tire and Macquarie Group 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 Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and Macquarie Group.
Diversification Opportunities for Goodyear Tire and Macquarie Group
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Goodyear and Macquarie is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and Macquarie Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie Group 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 Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Macquarie Group go up and down completely randomly.
Pair Corralation between Goodyear Tire and Macquarie Group
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to generate 2.38 times more return on investment than Macquarie Group. However, Goodyear Tire is 2.38 times more volatile than Macquarie Group Limited. It trades about -0.01 of its potential returns per unit of risk. Macquarie Group Limited is currently generating about -0.06 per unit of risk. If you would invest 885.00 in Goodyear Tire Rubber on October 16, 2024 and sell it today you would lose (19.00) from holding Goodyear Tire Rubber or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. Macquarie Group Limited
Performance |
| Timeline |
| Goodyear Tire Rubber |
| Macquarie Group |
Goodyear Tire and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and Macquarie Group
The main advantage of trading using opposite Goodyear Tire and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, Macquarie Group 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 Macquarie Group will offset losses from the drop in Macquarie Group's long position.| Goodyear Tire vs. UNITED UTILITIES GR | Goodyear Tire vs. MARKET VECTR RETAIL | Goodyear Tire vs. Corsair Gaming | Goodyear Tire vs. H2O Retailing |
| Macquarie Group vs. INSURANCE AUST GRP | Macquarie Group vs. Hyster Yale Materials Handling | Macquarie Group vs. Goodyear Tire Rubber | Macquarie Group vs. Summit Materials |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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