Correlation Between Toro and NSTAR
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By analyzing existing cross correlation between Toro Co and NSTAR ELEC 44, you can compare the effects of market volatilities on Toro and NSTAR 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 NSTAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toro and NSTAR.
Diversification Opportunities for Toro and NSTAR
Excellent diversification
The 3 months correlation between Toro and NSTAR is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Toro Co and NSTAR ELEC 44 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR ELEC 44 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 NSTAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR ELEC 44 has no effect on the direction of Toro i.e., Toro and NSTAR go up and down completely randomly.
Pair Corralation between Toro and NSTAR
Considering the 90-day investment horizon Toro Co is expected to generate 1.72 times more return on investment than NSTAR. However, Toro is 1.72 times more volatile than NSTAR ELEC 44. It trades about 0.22 of its potential returns per unit of risk. NSTAR ELEC 44 is currently generating about 0.02 per unit of risk. If you would invest 8,048 in Toro Co on September 1, 2024 and sell it today you would earn a total of 660.00 from holding Toro Co or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 23.81% |
| Values | Daily Returns |
Toro Co vs. NSTAR ELEC 44
Performance |
| Timeline |
| Toro |
| NSTAR ELEC 44 |
Toro and NSTAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toro and NSTAR
The main advantage of trading using opposite Toro and NSTAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toro position performs unexpectedly, NSTAR 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 NSTAR will offset losses from the drop in NSTAR's long position.The idea behind Toro Co and NSTAR ELEC 44 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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