Correlation Between Solstice Advanced and Goodyear Tire

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

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

Diversification Opportunities for Solstice Advanced and Goodyear Tire

-0.04

Correlation Coefficient

Solstice Advanced  Goodyear Tire

Good diversification

The 3 months correlation between Solstice and Goodyear is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Solstice Advanced Materials, 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 Solstice Advanced 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 Solstice Advanced Materials, 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 Solstice Advanced i.e., Solstice Advanced and Goodyear Tire go up and down completely randomly.

Pair Corralation between Solstice Advanced and Goodyear Tire

Given the investment horizon of 90 days Solstice Advanced Materials, is expected to under-perform the Goodyear Tire. In addition to that, Solstice Advanced is 1.45 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 0.01 per unit of volatility. If you would invest  855.00  in Goodyear Tire Rubber on September 9, 2025 and sell it today you would lose (1.00) from holding Goodyear Tire Rubber or give up 0.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.38%
Values	Daily Returns

Solstice Advanced Materials,  vs.  Goodyear Tire Rubber

Solstice Advanced

Risk-Adjusted Performance

Weakest

Over the last 90 days Solstice Advanced Materials, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Solstice Advanced is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Goodyear Tire Rubber

Risk-Adjusted Performance

Weakest

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 comparatively stable basic indicators, Goodyear Tire is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Solstice Advanced and Goodyear Tire

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

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.