Correlation Between PLAYMATES TOYS and United States

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

By analyzing existing cross correlation between PLAYMATES TOYS and United States Steel, you can compare the effects of market volatilities on PLAYMATES TOYS and United States 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 PLAYMATES TOYS with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYMATES TOYS and United States.

Diversification Opportunities for PLAYMATES TOYS and United States

0.1

Correlation Coefficient

PLAYMATES TOYS  United States

Average diversification

The 3 months correlation between PLAYMATES and United is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding PLAYMATES TOYS and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and PLAYMATES TOYS 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 PLAYMATES TOYS are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of PLAYMATES TOYS i.e., PLAYMATES TOYS and United States go up and down completely randomly.

Pair Corralation between PLAYMATES TOYS and United States

Assuming the 90 days trading horizon PLAYMATES TOYS is expected to under-perform the United States. In addition to that, PLAYMATES TOYS is 1.62 times more volatile than United States Steel. It trades about -0.05 of its total potential returns per unit of risk. United States Steel is currently generating about 0.24 per unit of volatility. If you would invest  2,990  in United States Steel on October 25, 2024 and sell it today you would earn a total of  502.00  from holding United States Steel or generate 16.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PLAYMATES TOYS  vs.  United States Steel

PLAYMATES TOYS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAYMATES TOYS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PLAYMATES TOYS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, United States is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PLAYMATES TOYS and United States

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

The idea behind PLAYMATES TOYS and United States Steel 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.