Correlation Between Goodyear Tire and KINGBOARD CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL, you can compare the effects of market volatilities on Goodyear Tire and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and KINGBOARD CHEMICAL.
Diversification Opportunities for Goodyear Tire and KINGBOARD CHEMICAL
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goodyear and KINGBOARD is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and KINGBOARD CHEMICAL go up and down completely randomly.
Pair Corralation between Goodyear Tire and KINGBOARD CHEMICAL
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to under-perform the KINGBOARD CHEMICAL. But the stock apears to be less risky and, when comparing its historical volatility, Goodyear Tire Rubber is 1.22 times less risky than KINGBOARD CHEMICAL. The stock trades about -0.04 of its potential returns per unit of risk. The KINGBOARD CHEMICAL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 144.00 in KINGBOARD CHEMICAL on November 9, 2024 and sell it today you would earn a total of 106.00 from holding KINGBOARD CHEMICAL or generate 73.61% 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. KINGBOARD CHEMICAL
Performance |
| Timeline |
| Goodyear Tire Rubber |
| KINGBOARD CHEMICAL |
Goodyear Tire and KINGBOARD CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and KINGBOARD CHEMICAL
The main advantage of trading using opposite Goodyear Tire and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL will offset losses from the drop in KINGBOARD CHEMICAL's long position.| Goodyear Tire vs. Brockhaus Capital Management | Goodyear Tire vs. INTER CARS SA | Goodyear Tire vs. Commercial Vehicle Group | Goodyear Tire vs. GEELY AUTOMOBILE |
| KINGBOARD CHEMICAL vs. SILICON LABORATOR | KINGBOARD CHEMICAL vs. PKSHA TECHNOLOGY INC | KINGBOARD CHEMICAL vs. Casio Computer CoLtd | KINGBOARD CHEMICAL vs. X FAB Silicon Foundries |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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