Correlation Between Goodyear Tire and ASURE SOFTWARE

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

Diversification Opportunities for Goodyear Tire and ASURE SOFTWARE

0.6

Correlation Coefficient

Goodyear Tire  ASURE SOFTWARE

Poor diversification

The 3 months correlation between Goodyear and ASURE is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and ASURE SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASURE SOFTWARE 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 ASURE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASURE SOFTWARE has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and ASURE SOFTWARE go up and down completely randomly.

Pair Corralation between Goodyear Tire and ASURE SOFTWARE

Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to under-perform the ASURE SOFTWARE. In addition to that, Goodyear Tire is 1.11 times more volatile than ASURE SOFTWARE. It trades about -0.39 of its total potential returns per unit of risk. ASURE SOFTWARE is currently generating about 0.35 per unit of volatility. If you would invest  850.00  in ASURE SOFTWARE on October 10, 2024 and sell it today you would earn a total of  100.00  from holding ASURE SOFTWARE or generate 11.76% 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.  ASURE SOFTWARE

Goodyear Tire Rubber

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goodyear Tire Rubber are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Goodyear Tire may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ASURE SOFTWARE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ASURE SOFTWARE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, ASURE SOFTWARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goodyear Tire and ASURE SOFTWARE

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

The idea behind Goodyear Tire Rubber and ASURE SOFTWARE 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.