Correlation Between Goodyear and Stepan
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By analyzing existing cross correlation between Goodyear Tire Rubber and Stepan Company, you can compare the effects of market volatilities on Goodyear and Stepan 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 with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear and Stepan.
Diversification Opportunities for Goodyear and Stepan
Good diversification
The 3 months correlation between Goodyear and Stepan is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Goodyear 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Goodyear i.e., Goodyear and Stepan go up and down completely randomly.
Pair Corralation between Goodyear and Stepan
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to under-perform the Stepan. But the bond apears to be less risky and, when comparing its historical volatility, Goodyear Tire Rubber is 8.02 times less risky than Stepan. The bond trades about -0.06 of its potential returns per unit of risk. The Stepan Company is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,292 in Stepan Company on August 25, 2024 and sell it today you would earn a total of 393.00 from holding Stepan Company or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. Stepan Company
Performance |
| Timeline |
| Goodyear Tire Rubber |
| Stepan Company |
Goodyear and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear and Stepan
The main advantage of trading using opposite Goodyear and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Goodyear vs. Stepan Company | Goodyear vs. Academy Sports Outdoors | Goodyear vs. Lion One Metals | Goodyear vs. Lindblad Expeditions Holdings |
| Stepan vs. Minerals Technologies | Stepan vs. Oil Dri | Stepan vs. Quaker Chemical | Stepan vs. Sensient Technologies |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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