Correlation Between Goodyear Tire and ADRIATIC METALS

Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and ADRIATIC METALS 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 Tire and ADRIATIC METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goodyear Tire Rubber and ADRIATIC METALS LS 013355, you can compare the effects of market volatilities on Goodyear Tire and ADRIATIC METALS 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 Tire with a short position of ADRIATIC METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and ADRIATIC METALS.

Diversification Opportunities for Goodyear Tire and ADRIATIC METALS

0.52

Correlation Coefficient

Goodyear Tire  ADRIATIC METALS

Very weak diversification

The 3 months correlation between Goodyear and ADRIATIC is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and ADRIATIC METALS LS 013355 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADRIATIC METALS LS and Goodyear Tire 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 ADRIATIC METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADRIATIC METALS LS has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and ADRIATIC METALS go up and down completely randomly.

Pair Corralation between Goodyear Tire and ADRIATIC METALS

Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to generate 0.87 times more return on investment than ADRIATIC METALS. However, Goodyear Tire Rubber is 1.15 times less risky than ADRIATIC METALS. It trades about 0.18 of its potential returns per unit of risk. ADRIATIC METALS LS 013355 is currently generating about 0.07 per unit of risk. If you would invest  708.00  in Goodyear Tire Rubber on September 14, 2024 and sell it today you would earn a total of  254.00  from holding Goodyear Tire Rubber or generate 35.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Goodyear Tire Rubber  vs.  ADRIATIC METALS LS 013355

Goodyear Tire Rubber

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goodyear Tire Rubber are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goodyear Tire unveiled solid returns over the last few months and may actually be approaching a breakup point.

ADRIATIC METALS LS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADRIATIC METALS LS 013355 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ADRIATIC METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goodyear Tire and ADRIATIC METALS

The main advantage of trading using opposite Goodyear Tire and ADRIATIC METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, ADRIATIC METALS 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 ADRIATIC METALS will offset losses from the drop in ADRIATIC METALS's long position.

The idea behind Goodyear Tire Rubber and ADRIATIC METALS LS 013355 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.