Correlation Between NACCO Industries and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both NACCO Industries 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 NACCO Industries and Goodyear Tire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NACCO Industries and Goodyear Tire Rubber, you can compare the effects of market volatilities on NACCO Industries 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 NACCO Industries with a short position of Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of NACCO Industries and Goodyear Tire.
Diversification Opportunities for NACCO Industries and Goodyear Tire
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NACCO and Goodyear is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NACCO Industries 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 NACCO Industries 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 NACCO Industries 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 NACCO Industries i.e., NACCO Industries and Goodyear Tire go up and down completely randomly.
Pair Corralation between NACCO Industries and Goodyear Tire
Allowing for the 90-day total investment horizon NACCO Industries is expected to generate 0.82 times more return on investment than Goodyear Tire. However, NACCO Industries is 1.22 times less risky than Goodyear Tire. It trades about -0.13 of its potential returns per unit of risk. Goodyear Tire Rubber is currently generating about -0.36 per unit of risk. If you would invest 2,990 in NACCO Industries on January 27, 2024 and sell it today you would lose (138.00) from holding NACCO Industries or give up 4.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NACCO Industries vs. Goodyear Tire Rubber
Performance |
| Timeline |
| NACCO Industries |
| Goodyear Tire Rubber |
NACCO Industries and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NACCO Industries and Goodyear Tire
The main advantage of trading using opposite NACCO Industries and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NACCO Industries 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.| NACCO Industries vs. Indo Tambangraya Megah | NACCO Industries vs. Yanzhou Coal Mining | NACCO Industries vs. Bukit Asam Tbk | NACCO Industries vs. Geo Energy Resources |
| Goodyear Tire vs. Allison Transmission Holdings | Goodyear Tire vs. Aptiv PLC | Goodyear Tire vs. LKQ Corporation | Goodyear Tire vs. Lear Corporation |
Check out your portfolio center.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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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