Correlation Between Toro and ATRenew
Can any of the company-specific risk be diversified away by investing in both Toro and ATRenew 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 ATRenew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toro Co and ATRenew Inc DRC, you can compare the effects of market volatilities on Toro and ATRenew 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 ATRenew. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toro and ATRenew.
Diversification Opportunities for Toro and ATRenew
Very weak diversification
The 3 months correlation between Toro and ATRenew is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Toro Co and ATRenew Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRenew Inc DRC 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 ATRenew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRenew Inc DRC has no effect on the direction of Toro i.e., Toro and ATRenew go up and down completely randomly.
Pair Corralation between Toro and ATRenew
Considering the 90-day investment horizon Toro Co is expected to under-perform the ATRenew. But the stock apears to be less risky and, when comparing its historical volatility, Toro Co is 2.41 times less risky than ATRenew. The stock trades about -0.02 of its potential returns per unit of risk. The ATRenew Inc DRC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 305.00 in ATRenew Inc DRC on November 2, 2024 and sell it today you would lose (35.50) from holding ATRenew Inc DRC or give up 11.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Toro Co vs. ATRenew Inc DRC
Performance |
| Timeline |
| Toro |
| ATRenew Inc DRC |
Toro and ATRenew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toro and ATRenew
The main advantage of trading using opposite Toro and ATRenew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toro position performs unexpectedly, ATRenew 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 ATRenew will offset losses from the drop in ATRenew's long position.The idea behind Toro Co and ATRenew Inc DRC 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.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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