Correlation Between Shenandoah Telecommunicatio and Goodyear Tire

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

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

Diversification Opportunities for Shenandoah Telecommunicatio and Goodyear Tire

0.0

Correlation Coefficient

Shenandoah Telecommunicatio  Goodyear Tire

Pay attention - limited upside

The 3 months correlation between Shenandoah and Goodyear is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications 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 Shenandoah Telecommunicatio 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 Shenandoah Telecommunications 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 Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and Goodyear Tire go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and Goodyear Tire

Assuming the 90 days horizon Shenandoah Telecommunications is expected to under-perform the Goodyear Tire. In addition to that, Shenandoah Telecommunicatio is 1.04 times more volatile than Goodyear Tire Rubber. It trades about -0.01 of its total potential returns per unit of risk. Goodyear Tire Rubber is currently generating about 0.0 per unit of volatility. If you would invest  1,012  in Goodyear Tire Rubber on October 10, 2024 and sell it today you would lose (190.00) from holding Goodyear Tire Rubber or give up 18.77% of portfolio value over 90 days.

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

Shenandoah Telecommunications  vs.  Goodyear Tire Rubber

Shenandoah Telecommunicatio

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shenandoah Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Shenandoah Telecommunicatio and Goodyear Tire

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