Correlation Between FLOW TRADERS and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS 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 FLOW TRADERS and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and Goodyear Tire Rubber, you can compare the effects of market volatilities on FLOW TRADERS 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 FLOW TRADERS with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Goodyear Tire.
Diversification Opportunities for FLOW TRADERS and Goodyear Tire
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FLOW and Goodyear is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD 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 FLOW TRADERS 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 FLOW TRADERS LTD 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 FLOW TRADERS i.e., FLOW TRADERS and Goodyear Tire go up and down completely randomly.
Pair Corralation between FLOW TRADERS and Goodyear Tire
Assuming the 90 days horizon FLOW TRADERS LTD is expected to generate 0.65 times more return on investment than Goodyear Tire. However, FLOW TRADERS LTD is 1.54 times less risky than Goodyear Tire. It trades about 0.12 of its potential returns per unit of risk. Goodyear Tire Rubber is currently generating about -0.03 per unit of risk. If you would invest 2,114 in FLOW TRADERS LTD on November 6, 2024 and sell it today you would earn a total of 248.00 from holding FLOW TRADERS LTD or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. Goodyear Tire Rubber
Performance |
| Timeline |
| FLOW TRADERS LTD |
| Goodyear Tire Rubber |
FLOW TRADERS and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and Goodyear Tire
The main advantage of trading using opposite FLOW TRADERS and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS 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.| FLOW TRADERS vs. UNIVERSAL MUSIC GROUP | FLOW TRADERS vs. Strategic Education | FLOW TRADERS vs. The Trade Desk | FLOW TRADERS vs. Xinhua Winshare Publishing |
| Goodyear Tire vs. DALATA HOTEL | Goodyear Tire vs. COVIVIO HOTELS INH | Goodyear Tire vs. SBI Insurance Group | Goodyear Tire vs. Playa Hotels Resorts |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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