Correlation Between GBS Software and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both GBS Software and Goodyear Tire 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 GBS Software and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GBS Software AG and Goodyear Tire Rubber, you can compare the effects of market volatilities on GBS Software and Goodyear Tire 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 GBS Software with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of GBS Software and Goodyear Tire.
Diversification Opportunities for GBS Software and Goodyear Tire
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GBS and Goodyear is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding GBS Software AG and Goodyear Tire Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Tire Rubber and GBS Software 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 GBS Software AG are associated (or correlated) with Goodyear Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodyear Tire Rubber has no effect on the direction of GBS Software i.e., GBS Software and Goodyear Tire go up and down completely randomly.
Pair Corralation between GBS Software and Goodyear Tire
Assuming the 90 days trading horizon GBS Software AG is expected to generate 0.81 times more return on investment than Goodyear Tire. However, GBS Software AG is 1.23 times less risky than Goodyear Tire. It trades about 0.04 of its potential returns per unit of risk. Goodyear Tire Rubber is currently generating about 0.0 per unit of risk. If you would invest 214.00 in GBS Software AG on October 11, 2024 and sell it today you would earn a total of 90.00 from holding GBS Software AG or generate 42.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GBS Software AG vs. Goodyear Tire Rubber
Performance |
| Timeline |
| GBS Software AG |
| Goodyear Tire Rubber |
GBS Software and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GBS Software and Goodyear Tire
The main advantage of trading using opposite GBS Software and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GBS Software position performs unexpectedly, Goodyear Tire 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 Goodyear Tire will offset losses from the drop in Goodyear Tire's long position.| GBS Software vs. QURATE RETAIL INC | GBS Software vs. Costco Wholesale Corp | GBS Software vs. BJs Restaurants | GBS Software vs. Burlington Stores |
| Goodyear Tire vs. US Physical Therapy | Goodyear Tire vs. GBS Software AG | Goodyear Tire vs. Kingdee International Software | Goodyear Tire vs. CPU SOFTWAREHOUSE |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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