Correlation Between Platinum Investment and GOODYEAR T
Can any of the company-specific risk be diversified away by investing in both Platinum Investment and GOODYEAR T 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 Platinum Investment and GOODYEAR T into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum Investment Management and GOODYEAR T RUBBER, you can compare the effects of market volatilities on Platinum Investment and GOODYEAR T 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 Platinum Investment with a short position of GOODYEAR T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Investment and GOODYEAR T.
Diversification Opportunities for Platinum Investment and GOODYEAR T
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Platinum and GOODYEAR is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Investment Management and GOODYEAR T RUBBER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODYEAR T RUBBER and Platinum Investment 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 Platinum Investment Management are associated (or correlated) with GOODYEAR T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODYEAR T RUBBER has no effect on the direction of Platinum Investment i.e., Platinum Investment and GOODYEAR T go up and down completely randomly.
Pair Corralation between Platinum Investment and GOODYEAR T
Assuming the 90 days horizon Platinum Investment Management is expected to under-perform the GOODYEAR T. But the stock apears to be less risky and, when comparing its historical volatility, Platinum Investment Management is 2.35 times less risky than GOODYEAR T. The stock trades about -0.42 of its potential returns per unit of risk. The GOODYEAR T RUBBER is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 738.00 in GOODYEAR T RUBBER on September 1, 2024 and sell it today you would earn a total of 276.00 from holding GOODYEAR T RUBBER or generate 37.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Platinum Investment Management vs. GOODYEAR T RUBBER
Performance |
| Timeline |
| Platinum Investment |
| GOODYEAR T RUBBER |
Platinum Investment and GOODYEAR T Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum Investment and GOODYEAR T
The main advantage of trading using opposite Platinum Investment and GOODYEAR T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Investment position performs unexpectedly, GOODYEAR T 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 T will offset losses from the drop in GOODYEAR T's long position.| Platinum Investment vs. Ameriprise Financial | Platinum Investment vs. Ares Management Corp | Platinum Investment vs. Superior Plus Corp | Platinum Investment vs. NMI Holdings |
| GOODYEAR T vs. Pure Storage | GOODYEAR T vs. DICKER DATA LTD | GOODYEAR T vs. PUBLIC STORAGE PRFO | GOODYEAR T vs. INFORMATION SVC GRP |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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