Correlation Between GOODYEAR T and CarMax

Can any of the company-specific risk be diversified away by investing in both GOODYEAR T and CarMax 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 CarMax 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 CarMax Inc, you can compare the effects of market volatilities on GOODYEAR T and CarMax 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 CarMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOODYEAR T and CarMax.

Diversification Opportunities for GOODYEAR T and CarMax

0.0

Correlation Coefficient

GOODYEAR T  CarMax

Pay attention - limited upside

The 3 months correlation between GOODYEAR and CarMax is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GOODYEAR T RUBBER and CarMax Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarMax Inc 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 CarMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarMax Inc has no effect on the direction of GOODYEAR T i.e., GOODYEAR T and CarMax go up and down completely randomly.

Pair Corralation between GOODYEAR T and CarMax

If you would invest  831.00  in GOODYEAR T RUBBER on October 6, 2024 and sell it today you would earn a total of  17.00  from holding GOODYEAR T RUBBER or generate 2.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.56%
Values	Daily Returns

GOODYEAR T RUBBER  vs.  CarMax Inc

GOODYEAR T RUBBER

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GOODYEAR T RUBBER are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, GOODYEAR T unveiled solid returns over the last few months and may actually be approaching a breakup point.

CarMax Inc

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days CarMax Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CarMax is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GOODYEAR T and CarMax

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

The idea behind GOODYEAR T RUBBER and CarMax Inc 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.