Correlation Between EuroDry and Toro
Can any of the company-specific risk be diversified away by investing in both EuroDry 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 EuroDry and Toro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EuroDry and Toro, you can compare the effects of market volatilities on EuroDry 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 EuroDry with a short position of Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of EuroDry and Toro.
Diversification Opportunities for EuroDry and Toro
Excellent diversification
The 3 months correlation between EuroDry and Toro is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding EuroDry and Toro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro and EuroDry 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 EuroDry 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 EuroDry i.e., EuroDry and Toro go up and down completely randomly.
Pair Corralation between EuroDry and Toro
Given the investment horizon of 90 days EuroDry is expected to generate 1.12 times more return on investment than Toro. However, EuroDry is 1.12 times more volatile than Toro. It trades about 0.02 of its potential returns per unit of risk. Toro is currently generating about -0.13 per unit of risk. If you would invest 1,134 in EuroDry on November 28, 2024 and sell it today you would earn a total of 3.00 from holding EuroDry or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
EuroDry vs. Toro
Performance |
| Timeline |
| EuroDry |
| Toro |
EuroDry and Toro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EuroDry and Toro
The main advantage of trading using opposite EuroDry and Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EuroDry 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.The idea behind EuroDry and Toro 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.| Toro vs. Seanergy Maritime Holdings | Toro vs. Globus Maritime | Toro vs. TOP Ships | Toro vs. Diana Shipping |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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