Correlation Between GOODYEAR T and Swiss Life

Can any of the company-specific risk be diversified away by investing in both GOODYEAR T and Swiss Life 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 GOODYEAR T and Swiss Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GOODYEAR T RUBBER and Swiss Life Holding, you can compare the effects of market volatilities on GOODYEAR T and Swiss Life 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 T with a short position of Swiss Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODYEAR T and Swiss Life.

Diversification Opportunities for GOODYEAR T and Swiss Life

0.54

Correlation Coefficient

GOODYEAR T  Swiss Life

Very weak diversification

The 3 months correlation between GOODYEAR and Swiss is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER and Swiss Life Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Life Holding and GOODYEAR T 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 T RUBBER are associated (or correlated) with Swiss Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Life Holding has no effect on the direction of GOODYEAR T i.e., GOODYEAR T and Swiss Life go up and down completely randomly.

Pair Corralation between GOODYEAR T and Swiss Life

Assuming the 90 days trading horizon GOODYEAR T RUBBER is expected to generate 1.25 times more return on investment than Swiss Life. However, GOODYEAR T is 1.25 times more volatile than Swiss Life Holding. It trades about 0.18 of its potential returns per unit of risk. Swiss Life Holding is currently generating about 0.02 per unit of risk. If you would invest  707.00  in GOODYEAR T RUBBER on September 13, 2024 and sell it today you would earn a total of  256.00  from holding GOODYEAR T RUBBER or generate 36.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

GOODYEAR T RUBBER  vs.  Swiss Life Holding

GOODYEAR T RUBBER

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GOODYEAR T RUBBER are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GOODYEAR T unveiled solid returns over the last few months and may actually be approaching a breakup point.

Swiss Life Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Swiss Life is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GOODYEAR T and Swiss Life

The main advantage of trading using opposite GOODYEAR T and Swiss Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOODYEAR T position performs unexpectedly, Swiss Life 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 Swiss Life will offset losses from the drop in Swiss Life's long position.

The idea behind GOODYEAR T RUBBER and Swiss Life Holding 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.