Correlation Between Goodyear Tire and JD SPORTS
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and JD SPORTS 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 JD SPORTS 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 JD SPORTS FASH, you can compare the effects of market volatilities on Goodyear Tire and JD SPORTS 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 JD SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and JD SPORTS.
Diversification Opportunities for Goodyear Tire and JD SPORTS
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Goodyear and 9JD is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH 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 JD SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD SPORTS FASH has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and JD SPORTS go up and down completely randomly.
Pair Corralation between Goodyear Tire and JD SPORTS
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to generate 0.89 times more return on investment than JD SPORTS. However, Goodyear Tire Rubber is 1.12 times less risky than JD SPORTS. It trades about 0.01 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about 0.01 per unit of risk. If you would invest 1,003 in Goodyear Tire Rubber on September 3, 2024 and sell it today you would lose (6.00) from holding Goodyear Tire Rubber or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. JD SPORTS FASH
Performance |
| Timeline |
| Goodyear Tire Rubber |
| JD SPORTS FASH |
Goodyear Tire and JD SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and JD SPORTS
The main advantage of trading using opposite Goodyear Tire and JD SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, JD SPORTS 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 JD SPORTS will offset losses from the drop in JD SPORTS's long position.| Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc |
| JD SPORTS vs. FAST RETAILCOSPHDR 1 | JD SPORTS vs. FAST RETAIL ADR | JD SPORTS vs. Ross Stores | JD SPORTS vs. Designer Brands |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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