Correlation Between Goodyear Tire and SHIN NIPPON
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and SHIN NIPPON 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 SHIN NIPPON 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 SHIN NIPPON MIOMEDI, you can compare the effects of market volatilities on Goodyear Tire and SHIN NIPPON 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 SHIN NIPPON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and SHIN NIPPON.
Diversification Opportunities for Goodyear Tire and SHIN NIPPON
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Goodyear and SHIN is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and SHIN NIPPON MIOMEDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIN NIPPON MIOMEDI 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 SHIN NIPPON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIN NIPPON MIOMEDI has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and SHIN NIPPON go up and down completely randomly.
Pair Corralation between Goodyear Tire and SHIN NIPPON
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to generate 1.64 times more return on investment than SHIN NIPPON. However, Goodyear Tire is 1.64 times more volatile than SHIN NIPPON MIOMEDI. It trades about 0.39 of its potential returns per unit of risk. SHIN NIPPON MIOMEDI is currently generating about 0.48 per unit of risk. If you would invest 751.00 in Goodyear Tire Rubber on August 31, 2024 and sell it today you would earn a total of 247.00 from holding Goodyear Tire Rubber or generate 32.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. SHIN NIPPON MIOMEDI
Performance |
| Timeline |
| Goodyear Tire Rubber |
| SHIN NIPPON MIOMEDI |
Goodyear Tire and SHIN NIPPON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and SHIN NIPPON
The main advantage of trading using opposite Goodyear Tire and SHIN NIPPON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, SHIN NIPPON 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 SHIN NIPPON will offset losses from the drop in SHIN NIPPON's long position.| Goodyear Tire vs. Air Lease | Goodyear Tire vs. UMC Electronics Co | Goodyear Tire vs. LPKF Laser Electronics | Goodyear Tire vs. Meiko Electronics Co |
| SHIN NIPPON vs. SOFI TECHNOLOGIES | SHIN NIPPON vs. Summit Materials | SHIN NIPPON vs. Materialise NV | SHIN NIPPON vs. Goodyear Tire Rubber |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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