Correlation Between Goodyear Tire and X FAB
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and X FAB 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 X FAB 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Goodyear Tire and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and X FAB.
Diversification Opportunities for Goodyear Tire and X FAB
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Goodyear and XFB is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and X FAB go up and down completely randomly.
Pair Corralation between Goodyear Tire and X FAB
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to generate 0.96 times more return on investment than X FAB. However, Goodyear Tire Rubber is 1.04 times less risky than X FAB. It trades about -0.04 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.08 per unit of risk. If you would invest 1,197 in Goodyear Tire Rubber on November 9, 2024 and sell it today you would lose (362.00) from holding Goodyear Tire Rubber or give up 30.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Goodyear Tire Rubber |
| X FAB Silicon |
Goodyear Tire and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and X FAB
The main advantage of trading using opposite Goodyear Tire and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB'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 |
| X FAB vs. Salesforce | X FAB vs. YATRA ONLINE DL 0001 | X FAB vs. Ares Management Corp | X FAB vs. MUTUIONLINE |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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