Correlation Between Dixie and Toray Industries
Can any of the company-specific risk be diversified away by investing in both Dixie and Toray Industries 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 Dixie and Toray Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Dixie Group and Toray Industries, you can compare the effects of market volatilities on Dixie and Toray Industries 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 Dixie with a short position of Toray Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dixie and Toray Industries.
Diversification Opportunities for Dixie and Toray Industries
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dixie and Toray is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding The Dixie Group and Toray Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toray Industries and Dixie 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 The Dixie Group are associated (or correlated) with Toray Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toray Industries has no effect on the direction of Dixie i.e., Dixie and Toray Industries go up and down completely randomly.
Pair Corralation between Dixie and Toray Industries
Given the investment horizon of 90 days The Dixie Group is expected to generate 2.35 times more return on investment than Toray Industries. However, Dixie is 2.35 times more volatile than Toray Industries. It trades about 0.01 of its potential returns per unit of risk. Toray Industries is currently generating about 0.02 per unit of risk. If you would invest 126.00 in The Dixie Group on August 28, 2024 and sell it today you would lose (47.00) from holding The Dixie Group or give up 37.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 58.04% |
| Values | Daily Returns |
The Dixie Group vs. Toray Industries
Performance |
| Timeline |
| Dixie Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Toray Industries |
Dixie and Toray Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dixie and Toray Industries
The main advantage of trading using opposite Dixie and Toray Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dixie position performs unexpectedly, Toray Industries 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 Toray Industries will offset losses from the drop in Toray Industries' long position.The idea behind The Dixie Group and Toray Industries 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.| Toray Industries vs. Unifi Inc | Toray Industries vs. Albany International | Toray Industries vs. Sumitomo Electric Industries | Toray Industries vs. Sekisui House |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |