Correlation Between Tootsie Roll and United Guardian
Can any of the company-specific risk be diversified away by investing in both Tootsie Roll and United Guardian 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 Tootsie Roll and United Guardian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tootsie Roll Industries and United Guardian, you can compare the effects of market volatilities on Tootsie Roll and United Guardian 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 Tootsie Roll with a short position of United Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tootsie Roll and United Guardian.
Diversification Opportunities for Tootsie Roll and United Guardian
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tootsie and United is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tootsie Roll Industries and United Guardian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Guardian and Tootsie Roll 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 Tootsie Roll Industries are associated (or correlated) with United Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Guardian has no effect on the direction of Tootsie Roll i.e., Tootsie Roll and United Guardian go up and down completely randomly.
Pair Corralation between Tootsie Roll and United Guardian
Allowing for the 90-day total investment horizon Tootsie Roll is expected to generate 7.13 times less return on investment than United Guardian. But when comparing it to its historical volatility, Tootsie Roll Industries is 2.2 times less risky than United Guardian. It trades about 0.01 of its potential returns per unit of risk. United Guardian is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 762.00 in United Guardian on August 27, 2024 and sell it today you would earn a total of 213.00 from holding United Guardian or generate 27.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tootsie Roll Industries vs. United Guardian
Performance |
| Timeline |
| Tootsie Roll Industries |
| United Guardian |
Tootsie Roll and United Guardian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tootsie Roll and United Guardian
The main advantage of trading using opposite Tootsie Roll and United Guardian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tootsie Roll position performs unexpectedly, United Guardian 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 United Guardian will offset losses from the drop in United Guardian's long position.| Tootsie Roll vs. Mondelez International | Tootsie Roll vs. Hershey Co | Tootsie Roll vs. Rocky Mountain Chocolate | Tootsie Roll vs. Chocoladefabriken Lindt Sprngli |
| United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Psychemedics | United Guardian vs. Unity Bancorp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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