Correlation Between Toys R and Argo Investments
Can any of the company-specific risk be diversified away by investing in both Toys R and Argo Investments 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 Toys R and Argo Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toys R Us and Argo Investments, you can compare the effects of market volatilities on Toys R and Argo Investments 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 Toys R with a short position of Argo Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toys R and Argo Investments.
Diversification Opportunities for Toys R and Argo Investments
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Toys and Argo is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Toys R Us and Argo Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Investments and Toys R 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 Toys R Us are associated (or correlated) with Argo Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Investments has no effect on the direction of Toys R i.e., Toys R and Argo Investments go up and down completely randomly.
Pair Corralation between Toys R and Argo Investments
Assuming the 90 days trading horizon Toys R Us is expected to generate 13.68 times more return on investment than Argo Investments. However, Toys R is 13.68 times more volatile than Argo Investments. It trades about 0.02 of its potential returns per unit of risk. Argo Investments is currently generating about 0.04 per unit of risk. If you would invest 7.00 in Toys R Us on August 29, 2024 and sell it today you would lose (2.00) from holding Toys R Us or give up 28.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toys R Us vs. Argo Investments
Performance |
| Timeline |
| Toys R Us |
| Argo Investments |
Toys R and Argo Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toys R and Argo Investments
The main advantage of trading using opposite Toys R and Argo Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toys R position performs unexpectedly, Argo Investments 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 Argo Investments will offset losses from the drop in Argo Investments' long position.The idea behind Toys R Us and Argo Investments 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.| Argo Investments vs. Aeon Metals | Argo Investments vs. REGAL ASIAN INVESTMENTS | Argo Investments vs. Hotel Property Investments | Argo Investments vs. Autosports Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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