Correlation Between Algoma Steel and Toro
Can any of the company-specific risk be diversified away by investing in both Algoma Steel and Toro 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 Algoma Steel and Toro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algoma Steel Group and Toro Co, you can compare the effects of market volatilities on Algoma Steel and Toro 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 Algoma Steel with a short position of Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algoma Steel and Toro.
Diversification Opportunities for Algoma Steel and Toro
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Algoma and Toro is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Algoma Steel Group and Toro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro and Algoma Steel 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 Algoma Steel Group are associated (or correlated) with Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of Algoma Steel i.e., Algoma Steel and Toro go up and down completely randomly.
Pair Corralation between Algoma Steel and Toro
Given the investment horizon of 90 days Algoma Steel Group is expected to generate 1.28 times more return on investment than Toro. However, Algoma Steel is 1.28 times more volatile than Toro Co. It trades about 0.06 of its potential returns per unit of risk. Toro Co is currently generating about -0.02 per unit of risk. If you would invest 604.00 in Algoma Steel Group on August 31, 2024 and sell it today you would earn a total of 463.00 from holding Algoma Steel Group or generate 76.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Algoma Steel Group vs. Toro Co
Performance |
| Timeline |
| Algoma Steel Group |
| Toro |
Algoma Steel and Toro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algoma Steel and Toro
The main advantage of trading using opposite Algoma Steel and Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algoma Steel position performs unexpectedly, Toro 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 Toro will offset losses from the drop in Toro's long position.| Algoma Steel vs. Nucor Corp | Algoma Steel vs. Steel Dynamics | Algoma Steel vs. ArcelorMittal SA ADR | Algoma Steel vs. Gerdau SA ADR |
| Toro vs. AMCON Distributing | Toro vs. Espey Mfg Electronics | Toro vs. Servotronics | Toro vs. CompX International |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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