Correlation Between Goodyear Tire and Nippon Yusen

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

Diversification Opportunities for Goodyear Tire and Nippon Yusen

-0.25

Correlation Coefficient

Goodyear Tire  Nippon Yusen

Very good diversification

The 3 months correlation between Goodyear and Nippon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and Nippon Yusen Kabushiki in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Yusen Kabushiki 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 Nippon Yusen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Yusen Kabushiki has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Nippon Yusen go up and down completely randomly.

Pair Corralation between Goodyear Tire and Nippon Yusen

Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to generate 1.76 times more return on investment than Nippon Yusen. However, Goodyear Tire is 1.76 times more volatile than Nippon Yusen Kabushiki. It trades about 0.09 of its potential returns per unit of risk. Nippon Yusen Kabushiki is currently generating about -0.01 per unit of risk. If you would invest  763.00  in Goodyear Tire Rubber on October 25, 2024 and sell it today you would earn a total of  116.00  from holding Goodyear Tire Rubber or generate 15.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Goodyear Tire Rubber  vs.  Nippon Yusen Kabushiki

Goodyear Tire Rubber

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goodyear Tire Rubber are ranked lower than 7 (%) 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.

Nippon Yusen Kabushiki

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Yusen Kabushiki has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Nippon Yusen 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 Tire and Nippon Yusen

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

The idea behind Goodyear Tire Rubber and Nippon Yusen Kabushiki 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.