Correlation Between Goodyear Tire and Ivy High

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

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

Diversification Opportunities for Goodyear Tire and Ivy High

-0.15

Correlation Coefficient

Goodyear Tire  Ivy High

Good diversification

The 3 months correlation between Goodyear and Ivy is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and Ivy High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy High Income and Goodyear Tire 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 Goodyear Tire Rubber are associated (or correlated) with Ivy High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy High Income has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and Ivy High go up and down completely randomly.

Pair Corralation between Goodyear Tire and Ivy High

Allowing for the 90-day total investment horizon Goodyear Tire Rubber is expected to under-perform the Ivy High. In addition to that, Goodyear Tire is 4.08 times more volatile than Ivy High Income. It trades about -0.26 of its total potential returns per unit of risk. Ivy High Income is currently generating about -0.09 per unit of volatility. If you would invest  604.00  in Ivy High Income on January 20, 2024 and sell it today you would lose (6.00) from holding Ivy High Income or give up 0.99% of portfolio value over 90 days.

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

Goodyear Tire Rubber  vs.  Ivy High Income

Goodyear Tire Rubber

Risk-Adjusted Performance

0 of 100

Very 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 unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ivy High Income

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy High Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ivy High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goodyear Tire and Ivy High

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

The idea behind Goodyear Tire Rubber and Ivy High Income 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.