Correlation Between Amerityre Corp and Lear

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Can any of the company-specific risk be diversified away by investing in both Amerityre Corp and Lear 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 Amerityre Corp and Lear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amerityre Corp and Lear Corporation, you can compare the effects of market volatilities on Amerityre Corp and Lear 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 Amerityre Corp with a short position of Lear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amerityre Corp and Lear.

Diversification Opportunities for Amerityre Corp and Lear

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Amerityre and Lear is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Amerityre Corp and Lear Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lear and Amerityre Corp 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 Amerityre Corp are associated (or correlated) with Lear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lear has no effect on the direction of Amerityre Corp i.e., Amerityre Corp and Lear go up and down completely randomly.

Pair Corralation between Amerityre Corp and Lear

If you would invest  4.00  in Amerityre Corp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Amerityre Corp or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy1.56%
ValuesDaily Returns

Amerityre Corp  vs.  Lear Corp.

 Performance 
       Timeline  
Amerityre Corp 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Amerityre Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amerityre Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Lear 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lear Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Amerityre Corp and Lear Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amerityre Corp and Lear

The main advantage of trading using opposite Amerityre Corp and Lear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amerityre Corp position performs unexpectedly, Lear 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 Lear will offset losses from the drop in Lear's long position.
The idea behind Amerityre Corp and Lear Corporation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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