Correlation Between Goodyear Tire and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC, you can compare the effects of market volatilities on Goodyear Tire and XLMedia PLC 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and XLMedia PLC.
Diversification Opportunities for Goodyear Tire and XLMedia PLC
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goodyear and XLMedia is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and XLMedia PLC go up and down completely randomly.
Pair Corralation between Goodyear Tire and XLMedia PLC
If you would invest 746.00 in Goodyear Tire Rubber on September 4, 2024 and sell it today you would earn a total of 296.00 from holding Goodyear Tire Rubber or generate 39.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. XLMedia PLC
Performance |
| Timeline |
| Goodyear Tire Rubber |
| XLMedia PLC |
Goodyear Tire and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and XLMedia PLC
The main advantage of trading using opposite Goodyear Tire and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc |
| XLMedia PLC vs. Alphabet Class A | XLMedia PLC vs. Meta Platforms | XLMedia PLC vs. Meta Platforms | XLMedia PLC vs. Tencent Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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