Correlation Between Toys R and Global Masters
Can any of the company-specific risk be diversified away by investing in both Toys R and Global Masters 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 Global Masters 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 Global Masters, you can compare the effects of market volatilities on Toys R and Global Masters 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 Global Masters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toys R and Global Masters.
Diversification Opportunities for Toys R and Global Masters
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Toys and Global is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Toys R Us and Global Masters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Masters 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 Global Masters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Masters has no effect on the direction of Toys R i.e., Toys R and Global Masters go up and down completely randomly.
Pair Corralation between Toys R and Global Masters
Assuming the 90 days trading horizon Toys R is expected to generate 2.39 times less return on investment than Global Masters. In addition to that, Toys R is 6.16 times more volatile than Global Masters. It trades about 0.0 of its total potential returns per unit of risk. Global Masters is currently generating about 0.06 per unit of volatility. If you would invest 238.00 in Global Masters on September 3, 2024 and sell it today you would earn a total of 123.00 from holding Global Masters or generate 51.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toys R Us vs. Global Masters
Performance |
| Timeline |
| Toys R Us |
| Global Masters |
Toys R and Global Masters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toys R and Global Masters
The main advantage of trading using opposite Toys R and Global Masters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toys R position performs unexpectedly, Global Masters 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 Global Masters will offset losses from the drop in Global Masters' long position.| Toys R vs. Westpac Banking | Toys R vs. Champion Iron | Toys R vs. iShares Global Healthcare | Toys R vs. Peel Mining |
| Global Masters vs. Dexus Convenience Retail | Global Masters vs. Sky Metals | Global Masters vs. Hutchison Telecommunications | Global Masters vs. Stelar Metals |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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