Correlation Between Goodyear Tire and THAI BEVERAGE
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and THAI BEVERAGE 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 THAI BEVERAGE 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 THAI BEVERAGE, you can compare the effects of market volatilities on Goodyear Tire and THAI BEVERAGE 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 THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and THAI BEVERAGE.
Diversification Opportunities for Goodyear Tire and THAI BEVERAGE
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goodyear and THAI is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE 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 THAI BEVERAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THAI BEVERAGE has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and THAI BEVERAGE go up and down completely randomly.
Pair Corralation between Goodyear Tire and THAI BEVERAGE
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to generate 1.19 times more return on investment than THAI BEVERAGE. However, Goodyear Tire is 1.19 times more volatile than THAI BEVERAGE. It trades about 0.07 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about 0.03 per unit of risk. If you would invest 739.00 in Goodyear Tire Rubber on September 24, 2024 and sell it today you would earn a total of 88.00 from holding Goodyear Tire Rubber or generate 11.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Goodyear Tire Rubber vs. THAI BEVERAGE
Performance |
Timeline |
Goodyear Tire Rubber |
THAI BEVERAGE |
Goodyear Tire and THAI BEVERAGE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Goodyear Tire and THAI BEVERAGE
The main advantage of trading using opposite Goodyear Tire and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, THAI BEVERAGE 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 THAI BEVERAGE will offset losses from the drop in THAI BEVERAGE's long position.Goodyear Tire vs. Casio Computer CoLtd | Goodyear Tire vs. Sunny Optical Technology | Goodyear Tire vs. Align Technology | Goodyear Tire vs. UPDATE SOFTWARE |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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