Correlation Between Sixt Leasing and Goodyear Tire

Can any of the company-specific risk be diversified away by investing in both Sixt Leasing 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 Sixt Leasing and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sixt Leasing SE and Goodyear Tire Rubber, you can compare the effects of market volatilities on Sixt Leasing 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 Sixt Leasing with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sixt Leasing and Goodyear Tire.

Diversification Opportunities for Sixt Leasing and Goodyear Tire

-0.1

Correlation Coefficient

Sixt Leasing  Goodyear Tire

Good diversification

The 3 months correlation between Sixt and Goodyear is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sixt Leasing SE and Goodyear Tire Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Tire Rubber and Sixt Leasing 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 Sixt Leasing SE 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 Rubber has no effect on the direction of Sixt Leasing i.e., Sixt Leasing and Goodyear Tire go up and down completely randomly.

Pair Corralation between Sixt Leasing and Goodyear Tire

Assuming the 90 days trading horizon Sixt Leasing SE is expected to generate 0.97 times more return on investment than Goodyear Tire. However, Sixt Leasing SE is 1.03 times less risky than Goodyear Tire. It trades about 0.01 of its potential returns per unit of risk. Goodyear Tire Rubber is currently generating about 0.01 per unit of risk. If you would invest  920.00  in Sixt Leasing SE on December 31, 2024 and sell it today you would earn a total of  0.00  from holding Sixt Leasing SE or generate 0.0% return on investment over 90 days.

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

Sixt Leasing SE  vs.  Goodyear Tire Rubber

Sixt Leasing SE

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sixt Leasing SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Sixt Leasing is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Goodyear Tire Rubber

Risk-Adjusted Performance

Weak

Over the last 90 days Goodyear Tire Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Goodyear Tire is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sixt Leasing and Goodyear Tire

The main advantage of trading using opposite Sixt Leasing and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixt Leasing 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.

The idea behind Sixt Leasing SE and Goodyear Tire Rubber 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.