Correlation Between Goodyear Tire and BHP Group
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and BHP Group 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 BHP Group 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 BHP Group Limited, you can compare the effects of market volatilities on Goodyear Tire and BHP Group 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 BHP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and BHP Group.
Diversification Opportunities for Goodyear Tire and BHP Group
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Goodyear and BHP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and BHP Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHP Group Limited 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 BHP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHP Group Limited has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and BHP Group go up and down completely randomly.
Pair Corralation between Goodyear Tire and BHP Group
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to under-perform the BHP Group. In addition to that, Goodyear Tire is 2.06 times more volatile than BHP Group Limited. It trades about -0.02 of its total potential returns per unit of risk. BHP Group Limited is currently generating about -0.01 per unit of volatility. If you would invest 4,660 in BHP Group Limited on November 7, 2024 and sell it today you would lose (20.00) from holding BHP Group Limited or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. BHP Group Limited
Performance |
| Timeline |
| Goodyear Tire Rubber |
| BHP Group Limited |
Goodyear Tire and BHP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and BHP Group
The main advantage of trading using opposite Goodyear Tire and BHP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, BHP Group 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 BHP Group will offset losses from the drop in BHP Group's long position.| Goodyear Tire vs. DALATA HOTEL | Goodyear Tire vs. COVIVIO HOTELS INH | Goodyear Tire vs. SBI Insurance Group | Goodyear Tire vs. Playa Hotels Resorts |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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