Correlation Between Tex Ray and Newretail

Can any of the company-specific risk be diversified away by investing in both Tex Ray and Newretail 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 Tex Ray and Newretail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tex Ray Industrial Co and Newretail Co, you can compare the effects of market volatilities on Tex Ray and Newretail 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 Tex Ray with a short position of Newretail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tex Ray and Newretail.

Diversification Opportunities for Tex Ray and Newretail

0.02

Correlation Coefficient

Tex Ray  Newretail

Significant diversification

The 3 months correlation between Tex and Newretail is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tex Ray Industrial Co and Newretail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newretail and Tex Ray 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 Tex Ray Industrial Co are associated (or correlated) with Newretail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newretail has no effect on the direction of Tex Ray i.e., Tex Ray and Newretail go up and down completely randomly.

Pair Corralation between Tex Ray and Newretail

Assuming the 90 days trading horizon Tex Ray Industrial Co is expected to generate 0.21 times more return on investment than Newretail. However, Tex Ray Industrial Co is 4.81 times less risky than Newretail. It trades about -0.04 of its potential returns per unit of risk. Newretail Co is currently generating about -0.05 per unit of risk. If you would invest  1,040  in Tex Ray Industrial Co on December 23, 2024 and sell it today you would lose (15.00) from holding Tex Ray Industrial Co or give up 1.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Tex Ray Industrial Co  vs.  Newretail Co

Tex Ray Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tex Ray Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tex Ray is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Newretail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newretail Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Tex Ray and Newretail

The main advantage of trading using opposite Tex Ray and Newretail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tex Ray position performs unexpectedly, Newretail 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 Newretail will offset losses from the drop in Newretail's long position.

The idea behind Tex Ray Industrial Co and Newretail Co 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.