Correlation Between Edgewell Personal and Torex Gold

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

By analyzing existing cross correlation between Edgewell Personal Care and Torex Gold Resources, you can compare the effects of market volatilities on Edgewell Personal and Torex Gold 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 Edgewell Personal with a short position of Torex Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewell Personal and Torex Gold.

Diversification Opportunities for Edgewell Personal and Torex Gold

-0.82

Correlation Coefficient

Edgewell Personal  Torex Gold

Pay attention - limited upside

The 3 months correlation between Edgewell and Torex is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Edgewell Personal Care and Torex Gold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torex Gold Resources and Edgewell Personal 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 Edgewell Personal Care are associated (or correlated) with Torex Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torex Gold Resources has no effect on the direction of Edgewell Personal i.e., Edgewell Personal and Torex Gold go up and down completely randomly.

Pair Corralation between Edgewell Personal and Torex Gold

Considering the 90-day investment horizon Edgewell Personal Care is expected to under-perform the Torex Gold. But the stock apears to be less risky and, when comparing its historical volatility, Edgewell Personal Care is 1.47 times less risky than Torex Gold. The stock trades about -0.05 of its potential returns per unit of risk. The Torex Gold Resources is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,925  in Torex Gold Resources on December 28, 2024 and sell it today you would earn a total of  698.00  from holding Torex Gold Resources or generate 36.26% return on investment over 90 days.

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

Edgewell Personal Care  vs.  Torex Gold Resources

Edgewell Personal Care

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edgewell Personal Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Torex Gold Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Torex Gold Resources are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Torex Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Edgewell Personal and Torex Gold

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

The idea behind Edgewell Personal Care and Torex Gold Resources 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.