Correlation Between Goodyear Tire and Apple
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Goodyear Tire and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and Apple.
Diversification Opportunities for Goodyear Tire and Apple
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Goodyear and Apple is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Apple go up and down completely randomly.
Pair Corralation between Goodyear Tire and Apple
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to under-perform the Apple. In addition to that, Goodyear Tire is 2.95 times more volatile than Apple Inc. It trades about -0.28 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.02 per unit of volatility. If you would invest 23,530 in Apple Inc on October 11, 2024 and sell it today you would earn a total of 50.00 from holding Apple Inc or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. Apple Inc
Performance |
| Timeline |
| Goodyear Tire Rubber |
| Apple Inc |
Goodyear Tire and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and Apple
The main advantage of trading using opposite Goodyear Tire and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Goodyear Tire vs. US Physical Therapy | Goodyear Tire vs. GBS Software AG | Goodyear Tire vs. Kingdee International Software | Goodyear Tire vs. CPU SOFTWAREHOUSE |
| Apple vs. Goodyear Tire Rubber | Apple vs. Thai Beverage Public | Apple vs. BOSTON BEER A | Apple vs. Mitsubishi 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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