Correlation Between Goodyear Tire and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and Atlas Copco 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 Atlas Copco 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 Atlas Copco A, you can compare the effects of market volatilities on Goodyear Tire and Atlas Copco 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 Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and Atlas Copco.
Diversification Opportunities for Goodyear Tire and Atlas Copco
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goodyear and Atlas is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and Atlas Copco A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco A 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 Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco A has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Atlas Copco go up and down completely randomly.
Pair Corralation between Goodyear Tire and Atlas Copco
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to generate 2.29 times more return on investment than Atlas Copco. However, Goodyear Tire is 2.29 times more volatile than Atlas Copco A. It trades about 0.41 of its potential returns per unit of risk. Atlas Copco A is currently generating about -0.01 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. Atlas Copco A
Performance |
| Timeline |
| Goodyear Tire Rubber |
| Atlas Copco A |
Goodyear Tire and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and Atlas Copco
The main advantage of trading using opposite Goodyear Tire and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.| Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc |
| Atlas Copco vs. LG Electronics | Atlas Copco vs. Applied Materials | Atlas Copco vs. Goodyear Tire Rubber | Atlas Copco vs. UET United Electronic |
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 Stocks Directory module to find actively traded stocks across global markets.
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