Correlation Between Mannatech Incorporated and Goodyear

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

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

Diversification Opportunities for Mannatech Incorporated and Goodyear

-0.36

Correlation Coefficient

Mannatech Incorporated  Goodyear

Very good diversification

The 3 months correlation between Mannatech and Goodyear is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mannatech Incorporated 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 Mannatech Incorporated 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 Mannatech Incorporated are associated (or correlated) with Goodyear. 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 Mannatech Incorporated i.e., Mannatech Incorporated and Goodyear go up and down completely randomly.

Pair Corralation between Mannatech Incorporated and Goodyear

Given the investment horizon of 90 days Mannatech Incorporated is expected to under-perform the Goodyear. In addition to that, Mannatech Incorporated is 8.27 times more volatile than Goodyear Tire Rubber. It trades about -0.05 of its total potential returns per unit of risk. Goodyear Tire Rubber is currently generating about 0.12 per unit of volatility. If you would invest  9,902  in Goodyear Tire Rubber on December 4, 2024 and sell it today you would earn a total of  98.00  from holding Goodyear Tire Rubber or generate 0.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Mannatech Incorporated  vs.  Goodyear Tire Rubber

Mannatech Incorporated

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mannatech Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Mannatech Incorporated showed solid returns over the last few months and may actually be approaching a breakup point.

Goodyear Tire Rubber

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Goodyear Tire Rubber are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Goodyear is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mannatech Incorporated and Goodyear

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

The idea behind Mannatech Incorporated 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.