Correlation Between Toromont Industries and Ritchie Bros
Can any of the company-specific risk be diversified away by investing in both Toromont Industries and Ritchie Bros 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 Toromont Industries and Ritchie Bros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toromont Industries and Ritchie Bros Auctioneers, you can compare the effects of market volatilities on Toromont Industries and Ritchie Bros 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 Toromont Industries with a short position of Ritchie Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toromont Industries and Ritchie Bros.
Diversification Opportunities for Toromont Industries and Ritchie Bros
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Toromont and Ritchie is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Toromont Industries and Ritchie Bros Auctioneers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ritchie Bros Auctioneers and Toromont Industries 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 Toromont Industries are associated (or correlated) with Ritchie Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ritchie Bros Auctioneers has no effect on the direction of Toromont Industries i.e., Toromont Industries and Ritchie Bros go up and down completely randomly.
Pair Corralation between Toromont Industries and Ritchie Bros
Assuming the 90 days trading horizon Toromont Industries is expected to under-perform the Ritchie Bros. But the stock apears to be less risky and, when comparing its historical volatility, Toromont Industries is 1.48 times less risky than Ritchie Bros. The stock trades about -0.42 of its potential returns per unit of risk. The Ritchie Bros Auctioneers is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 11,955 in Ritchie Bros Auctioneers on August 28, 2024 and sell it today you would earn a total of 1,800 from holding Ritchie Bros Auctioneers or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toromont Industries vs. Ritchie Bros Auctioneers
Performance |
| Timeline |
| Toromont Industries |
| Ritchie Bros Auctioneers |
Toromont Industries and Ritchie Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toromont Industries and Ritchie Bros
The main advantage of trading using opposite Toromont Industries and Ritchie Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toromont Industries position performs unexpectedly, Ritchie Bros 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 Ritchie Bros will offset losses from the drop in Ritchie Bros' long position.| Toromont Industries vs. Finning International | Toromont Industries vs. Stantec | Toromont Industries vs. Ritchie Bros Auctioneers | Toromont Industries vs. CCL Industries |
| Ritchie Bros vs. Toromont Industries | Ritchie Bros vs. Stantec | Ritchie Bros vs. Finning International | Ritchie Bros vs. FirstService Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |