Correlation Between Marketing Worldwide and Goodyear Tire

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

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

Diversification Opportunities for Marketing Worldwide and Goodyear Tire

-0.07

Correlation Coefficient

Marketing Worldwide  Goodyear Tire

Good diversification

The 3 months correlation between Marketing and Goodyear is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Marketing Worldwide 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 Marketing Worldwide 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 Marketing Worldwide 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 Marketing Worldwide i.e., Marketing Worldwide and Goodyear Tire go up and down completely randomly.

Pair Corralation between Marketing Worldwide and Goodyear Tire

Given the investment horizon of 90 days Marketing Worldwide is expected to generate 12.33 times more return on investment than Goodyear Tire. However, Marketing Worldwide is 12.33 times more volatile than Goodyear Tire Rubber. It trades about 0.17 of its potential returns per unit of risk. Goodyear Tire Rubber is currently generating about 0.04 per unit of risk. If you would invest  0.02  in Marketing Worldwide on December 23, 2024 and sell it today you would earn a total of  0.00  from holding Marketing Worldwide 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

Marketing Worldwide  vs.  Goodyear Tire Rubber

Marketing Worldwide

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marketing Worldwide are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Marketing Worldwide exhibited solid returns over the last few months and may actually be approaching a breakup point.

Goodyear Tire Rubber

Risk-Adjusted Performance

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 unfluctuating basic indicators, Goodyear Tire may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Marketing Worldwide and Goodyear Tire

The main advantage of trading using opposite Marketing Worldwide and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marketing Worldwide 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 Marketing Worldwide 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.