Correlation Between Goodyear Tire and ASML HOLDING
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and ASML HOLDING 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 ASML HOLDING 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 ASML HOLDING NY, you can compare the effects of market volatilities on Goodyear Tire and ASML HOLDING 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 ASML HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and ASML HOLDING.
Diversification Opportunities for Goodyear Tire and ASML HOLDING
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goodyear and ASML is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and ASML HOLDING NY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML HOLDING NY 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 ASML HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML HOLDING NY has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and ASML HOLDING go up and down completely randomly.
Pair Corralation between Goodyear Tire and ASML HOLDING
Assuming the 90 days trading horizon Goodyear Tire is expected to generate 1.08 times less return on investment than ASML HOLDING. In addition to that, Goodyear Tire is 1.68 times more volatile than ASML HOLDING NY. It trades about 0.09 of its total potential returns per unit of risk. ASML HOLDING NY is currently generating about 0.16 per unit of volatility. If you would invest 63,000 in ASML HOLDING NY on September 12, 2024 and sell it today you would earn a total of 3,800 from holding ASML HOLDING NY or generate 6.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. ASML HOLDING NY
Performance |
| Timeline |
| Goodyear Tire Rubber |
| ASML HOLDING NY |
Goodyear Tire and ASML HOLDING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and ASML HOLDING
The main advantage of trading using opposite Goodyear Tire and ASML HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, ASML HOLDING 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 ASML HOLDING will offset losses from the drop in ASML HOLDING's long position.| Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc | Goodyear Tire vs. Apple Inc |
| ASML HOLDING vs. The Yokohama Rubber | ASML HOLDING vs. Heidelberg Materials AG | ASML HOLDING vs. Goodyear Tire Rubber | ASML HOLDING vs. Plastic Omnium |
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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