Correlation Between Toast and BW LPG
Can any of the company-specific risk be diversified away by investing in both Toast and BW LPG 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 Toast and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toast Inc and BW LPG Limited, you can compare the effects of market volatilities on Toast and BW LPG 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 Toast with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toast and BW LPG.
Diversification Opportunities for Toast and BW LPG
Poor diversification
The 3 months correlation between Toast and BWLLF is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Toast Inc and BW LPG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG Limited and Toast 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 Toast Inc are associated (or correlated) with BW LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW LPG Limited has no effect on the direction of Toast i.e., Toast and BW LPG go up and down completely randomly.
Pair Corralation between Toast and BW LPG
If you would invest 3,098 in Toast Inc on September 2, 2024 and sell it today you would earn a total of 1,256 from holding Toast Inc or generate 40.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Toast Inc vs. BW LPG Limited
Performance |
| Timeline |
| Toast Inc |
| BW LPG Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Toast and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toast and BW LPG
The main advantage of trading using opposite Toast and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toast position performs unexpectedly, BW LPG 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 BW LPG will offset losses from the drop in BW LPG's long position.The idea behind Toast Inc and BW LPG Limited 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.| BW LPG vs. Hutchison Port Holdings | BW LPG vs. Kawasaki Kisen Kaisha | BW LPG vs. MPC Container Ships | BW LPG vs. Hapag Lloyd Aktiengesellschaft |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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