Correlation Between Barry Callebaut and Tootsie Roll

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

By analyzing existing cross correlation between Barry Callebaut AG and Tootsie Roll Industries, you can compare the effects of market volatilities on Barry Callebaut and Tootsie Roll 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 Barry Callebaut with a short position of Tootsie Roll. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barry Callebaut and Tootsie Roll.

Diversification Opportunities for Barry Callebaut and Tootsie Roll

0.61

Correlation Coefficient

Barry Callebaut  Tootsie Roll

Poor diversification

The 3 months correlation between Barry and Tootsie is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Barry Callebaut AG and Tootsie Roll Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tootsie Roll Industries and Barry Callebaut 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 Barry Callebaut AG are associated (or correlated) with Tootsie Roll. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tootsie Roll Industries has no effect on the direction of Barry Callebaut i.e., Barry Callebaut and Tootsie Roll go up and down completely randomly.

Pair Corralation between Barry Callebaut and Tootsie Roll

Assuming the 90 days horizon Barry Callebaut AG is expected to generate 1.26 times more return on investment than Tootsie Roll. However, Barry Callebaut is 1.26 times more volatile than Tootsie Roll Industries. It trades about 0.03 of its potential returns per unit of risk. Tootsie Roll Industries is currently generating about 0.03 per unit of risk. If you would invest  1,319  in Barry Callebaut AG on December 19, 2024 and sell it today you would earn a total of  34.00  from holding Barry Callebaut AG or generate 2.58% return on investment over 90 days.

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

Barry Callebaut AG  vs.  Tootsie Roll Industries

Barry Callebaut AG

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barry Callebaut AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Barry Callebaut is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tootsie Roll Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tootsie Roll Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tootsie Roll is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Barry Callebaut and Tootsie Roll

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

The idea behind Barry Callebaut AG and Tootsie Roll Industries 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.