Correlation Between Goodyear Tire and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium, you can compare the effects of market volatilities on Goodyear Tire and Plastic Omnium 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 Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and Plastic Omnium.
Diversification Opportunities for Goodyear Tire and Plastic Omnium
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Goodyear and Plastic is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Plastic Omnium go up and down completely randomly.
Pair Corralation between Goodyear Tire and Plastic Omnium
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to generate 1.55 times more return on investment than Plastic Omnium. However, Goodyear Tire is 1.55 times more volatile than Plastic Omnium. It trades about 0.04 of its potential returns per unit of risk. Plastic Omnium is currently generating about -0.19 per unit of risk. If you would invest 846.00 in Goodyear Tire Rubber on January 22, 2025 and sell it today you would earn a total of 9.00 from holding Goodyear Tire Rubber or generate 1.06% 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. Plastic Omnium
Performance |
| Timeline |
| Goodyear Tire Rubber |
| Plastic Omnium |
Goodyear Tire and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and Plastic Omnium
The main advantage of trading using opposite Goodyear Tire and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium's long position.| Goodyear Tire vs. PICKN PAY STORES | Goodyear Tire vs. COSTCO WHOLESALE CDR | Goodyear Tire vs. CITIC Telecom International | Goodyear Tire vs. AEON STORES |
| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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