Correlation Between Farmmi and Tootsie Roll
Can any of the company-specific risk be diversified away by investing in both Farmmi and Tootsie Roll 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 Farmmi and Tootsie Roll into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmmi Inc and Tootsie Roll Industries, you can compare the effects of market volatilities on Farmmi and Tootsie Roll 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 Farmmi with a short position of Tootsie Roll. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmmi and Tootsie Roll.
Diversification Opportunities for Farmmi and Tootsie Roll
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Farmmi and Tootsie is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Farmmi Inc and Tootsie Roll Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tootsie Roll Industries and Farmmi 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 Farmmi Inc are associated (or correlated) with Tootsie Roll. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tootsie Roll Industries has no effect on the direction of Farmmi i.e., Farmmi and Tootsie Roll go up and down completely randomly.
Pair Corralation between Farmmi and Tootsie Roll
Given the investment horizon of 90 days Farmmi Inc is expected to under-perform the Tootsie Roll. In addition to that, Farmmi is 4.06 times more volatile than Tootsie Roll Industries. It trades about -0.09 of its total potential returns per unit of risk. Tootsie Roll Industries is currently generating about -0.03 per unit of volatility. If you would invest 4,370 in Tootsie Roll Industries on August 27, 2024 and sell it today you would lose (1,045) from holding Tootsie Roll Industries or give up 23.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Farmmi Inc vs. Tootsie Roll Industries
Performance |
| Timeline |
| Farmmi Inc |
| Tootsie Roll Industries |
Farmmi and Tootsie Roll Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Farmmi and Tootsie Roll
The main advantage of trading using opposite Farmmi and Tootsie Roll positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmmi position performs unexpectedly, Tootsie Roll 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 Tootsie Roll will offset losses from the drop in Tootsie Roll's long position.The idea behind Farmmi Inc and Tootsie Roll 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.| Tootsie Roll vs. Mondelez International | Tootsie Roll vs. Hershey Co | Tootsie Roll vs. Rocky Mountain Chocolate | Tootsie Roll vs. Chocoladefabriken Lindt Sprngli |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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