Correlation Between Goodyear Public and Getabec Public
Can any of the company-specific risk be diversified away by investing in both Goodyear Public and Getabec Public 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 Public and Getabec Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goodyear Public and Getabec Public, you can compare the effects of market volatilities on Goodyear Public and Getabec Public 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 Public with a short position of Getabec Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Public and Getabec Public.
Diversification Opportunities for Goodyear Public and Getabec Public
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goodyear and Getabec is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Public and Getabec Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getabec Public and Goodyear Public 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 Public are associated (or correlated) with Getabec Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getabec Public has no effect on the direction of Goodyear Public i.e., Goodyear Public and Getabec Public go up and down completely randomly.
Pair Corralation between Goodyear Public and Getabec Public
Assuming the 90 days trading horizon Goodyear Public is expected to generate 0.95 times more return on investment than Getabec Public. However, Goodyear Public is 1.05 times less risky than Getabec Public. It trades about 0.24 of its potential returns per unit of risk. Getabec Public is currently generating about 0.01 per unit of risk. If you would invest 15,750 in Goodyear Public on August 29, 2024 and sell it today you would earn a total of 1,650 from holding Goodyear Public or generate 10.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Public vs. Getabec Public
Performance |
| Timeline |
| Goodyear Public |
| Getabec Public |
Goodyear Public and Getabec Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Public and Getabec Public
The main advantage of trading using opposite Goodyear Public and Getabec Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Public position performs unexpectedly, Getabec Public 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 Getabec Public will offset losses from the drop in Getabec Public's long position.| Goodyear Public vs. SCB X Public | Goodyear Public vs. Kasikornbank Public | Goodyear Public vs. PTT Public | Goodyear Public vs. Kasikornbank Public |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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