Correlation Between Kontoor Brands and Toray Industries
Can any of the company-specific risk be diversified away by investing in both Kontoor Brands 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 Kontoor Brands and Toray Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kontoor Brands and Toray Industries, you can compare the effects of market volatilities on Kontoor Brands 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 Kontoor Brands with a short position of Toray Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kontoor Brands and Toray Industries.
Diversification Opportunities for Kontoor Brands and Toray Industries
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kontoor and Toray is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and Toray Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toray Industries and Kontoor Brands 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 Kontoor Brands 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 Kontoor Brands i.e., Kontoor Brands and Toray Industries go up and down completely randomly.
Pair Corralation between Kontoor Brands and Toray Industries
Considering the 90-day investment horizon Kontoor Brands is expected to generate 0.72 times more return on investment than Toray Industries. However, Kontoor Brands is 1.39 times less risky than Toray Industries. It trades about 0.11 of its potential returns per unit of risk. Toray Industries is currently generating about 0.05 per unit of risk. If you would invest 5,170 in Kontoor Brands on August 24, 2024 and sell it today you would earn a total of 3,615 from holding Kontoor Brands or generate 69.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 63.2% |
| Values | Daily Returns |
Kontoor Brands vs. Toray Industries
Performance |
| Timeline |
| Kontoor Brands |
| Toray Industries |
Kontoor Brands and Toray Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kontoor Brands and Toray Industries
The main advantage of trading using opposite Kontoor Brands and Toray Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kontoor Brands 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.| Kontoor Brands vs. Vince Holding Corp | Kontoor Brands vs. Ermenegildo Zegna NV | Kontoor Brands vs. Columbia Sportswear | Kontoor Brands vs. Gildan Activewear |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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