Correlation Between Toro and Oatly Group
Can any of the company-specific risk be diversified away by investing in both Toro and Oatly 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 Toro and Oatly Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toro Co and Oatly Group AB, you can compare the effects of market volatilities on Toro and Oatly 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 Toro with a short position of Oatly Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toro and Oatly Group.
Diversification Opportunities for Toro and Oatly Group
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Toro and Oatly is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Toro Co and Oatly Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oatly Group AB and Toro 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 Toro Co are associated (or correlated) with Oatly Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oatly Group AB has no effect on the direction of Toro i.e., Toro and Oatly Group go up and down completely randomly.
Pair Corralation between Toro and Oatly Group
Considering the 90-day investment horizon Toro Co is expected to generate 0.28 times more return on investment than Oatly Group. However, Toro Co is 3.53 times less risky than Oatly Group. It trades about 0.19 of its potential returns per unit of risk. Oatly Group AB is currently generating about -0.07 per unit of risk. If you would invest 8,106 in Toro Co on August 30, 2024 and sell it today you would earn a total of 582.00 from holding Toro Co or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toro Co vs. Oatly Group AB
Performance |
| Timeline |
| Toro |
| Oatly Group AB |
Toro and Oatly Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toro and Oatly Group
The main advantage of trading using opposite Toro and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toro position performs unexpectedly, Oatly 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 Oatly Group will offset losses from the drop in Oatly Group's long position.The idea behind Toro Co and Oatly Group AB 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.| Oatly Group vs. Monster Beverage Corp | Oatly Group vs. Vita Coco | Oatly Group vs. PepsiCo | Oatly Group vs. The Coca Cola |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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