Correlation Between IShares Trust and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Goodyear Tire 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 IShares Trust and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and The Goodyear Tire, you can compare the effects of market volatilities on IShares Trust and Goodyear Tire 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 IShares Trust with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Goodyear Tire.
Diversification Opportunities for IShares Trust and Goodyear Tire
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Goodyear is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and The Goodyear Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Tire and IShares Trust 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 iShares Trust are associated (or correlated) with Goodyear Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodyear Tire has no effect on the direction of IShares Trust i.e., IShares Trust and Goodyear Tire go up and down completely randomly.
Pair Corralation between IShares Trust and Goodyear Tire
Assuming the 90 days trading horizon IShares Trust is expected to generate 2.03 times less return on investment than Goodyear Tire. But when comparing it to its historical volatility, iShares Trust is 2.28 times less risky than Goodyear Tire. It trades about 0.08 of its potential returns per unit of risk. The Goodyear Tire is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16,700 in The Goodyear Tire on October 22, 2024 and sell it today you would earn a total of 1,400 from holding The Goodyear Tire or generate 8.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.33% |
Values | Daily Returns |
iShares Trust vs. The Goodyear Tire
Performance |
Timeline |
iShares Trust |
Goodyear Tire |
IShares Trust and Goodyear Tire Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Trust and Goodyear Tire
The main advantage of trading using opposite IShares Trust and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Goodyear Tire 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 Goodyear Tire will offset losses from the drop in Goodyear Tire's long position.IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust |
Goodyear Tire vs. FIBRA Storage | Goodyear Tire vs. GMxico Transportes SAB | Goodyear Tire vs. Grupo Sports World | Goodyear Tire vs. Samsung Electronics Co |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Stocks Directory Find actively traded stocks across global markets | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |