Correlation Between Toray Industries and Lixil Group
Can any of the company-specific risk be diversified away by investing in both Toray Industries and Lixil Group 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 Toray Industries and Lixil Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toray Industries ADR and Lixil Group Corp, you can compare the effects of market volatilities on Toray Industries and Lixil Group 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 Toray Industries with a short position of Lixil Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toray Industries and Lixil Group.
Diversification Opportunities for Toray Industries and Lixil Group
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Toray and Lixil is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Toray Industries ADR and Lixil Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixil Group Corp and Toray 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 Toray Industries ADR are associated (or correlated) with Lixil Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixil Group Corp has no effect on the direction of Toray Industries i.e., Toray Industries and Lixil Group go up and down completely randomly.
Pair Corralation between Toray Industries and Lixil Group
Assuming the 90 days horizon Toray Industries ADR is expected to generate 2.03 times more return on investment than Lixil Group. However, Toray Industries is 2.03 times more volatile than Lixil Group Corp. It trades about 0.17 of its potential returns per unit of risk. Lixil Group Corp is currently generating about 0.25 per unit of risk. If you would invest 1,082 in Toray Industries ADR on August 27, 2024 and sell it today you would earn a total of 129.00 from holding Toray Industries ADR or generate 11.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toray Industries ADR vs. Lixil Group Corp
Performance |
| Timeline |
| Toray Industries ADR |
| Lixil Group Corp |
Toray Industries and Lixil Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toray Industries and Lixil Group
The main advantage of trading using opposite Toray Industries and Lixil Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toray Industries position performs unexpectedly, Lixil Group 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 Lixil Group will offset losses from the drop in Lixil Group's long position.| Toray Industries vs. Unifi Inc | Toray Industries vs. Albany International | Toray Industries vs. Sumitomo Electric Industries | Toray Industries vs. Sekisui House |
| Lixil Group vs. Masco | Lixil Group vs. Carrier Global Corp | Lixil Group vs. Daikin IndustriesLtd | Lixil Group vs. Lennox International |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Global Correlations Find global opportunities by holding instruments from different markets |