Correlation Between Goodyear Tire and Calibre Mining

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

Diversification Opportunities for Goodyear Tire and Calibre Mining

-0.53

Correlation Coefficient

Goodyear Tire  Calibre Mining

Excellent diversification

The 3 months correlation between Goodyear and Calibre is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and Calibre Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calibre Mining Corp 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 Calibre Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calibre Mining Corp has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Calibre Mining go up and down completely randomly.

Pair Corralation between Goodyear Tire and Calibre Mining

Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to under-perform the Calibre Mining. But the stock apears to be less risky and, when comparing its historical volatility, Goodyear Tire Rubber is 1.07 times less risky than Calibre Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Calibre Mining Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  102.00  in Calibre Mining Corp on September 19, 2024 and sell it today you would earn a total of  51.00  from holding Calibre Mining Corp or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Goodyear Tire Rubber  vs.  Calibre Mining Corp

Goodyear Tire Rubber

Risk-Adjusted Performance

7 of 100

OK

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.

Calibre Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calibre Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Goodyear Tire and Calibre Mining

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

The idea behind Goodyear Tire Rubber and Calibre Mining Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.