Correlation Between InfuSystems Holdings and Toro

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

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

Diversification Opportunities for InfuSystems Holdings and Toro

0.86

Correlation Coefficient

InfuSystems Holdings  Toro

Very poor diversification

The 3 months correlation between InfuSystems and Toro is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding InfuSystems Holdings and Toro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro and InfuSystems Holdings 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 InfuSystems Holdings are associated (or correlated) with Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of InfuSystems Holdings i.e., InfuSystems Holdings and Toro go up and down completely randomly.

Pair Corralation between InfuSystems Holdings and Toro

Given the investment horizon of 90 days InfuSystems Holdings is expected to under-perform the Toro. In addition to that, InfuSystems Holdings is 1.78 times more volatile than Toro Co. It trades about -0.17 of its total potential returns per unit of risk. Toro Co is currently generating about -0.08 per unit of volatility. If you would invest  8,021  in Toro Co on December 21, 2024 and sell it today you would lose (715.00) from holding Toro Co or give up 8.91% of portfolio value over 90 days.

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

InfuSystems Holdings  vs.  Toro Co

InfuSystems Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days InfuSystems Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Toro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toro Co 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.

Pair Trading with InfuSystems Holdings and Toro

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

The idea behind InfuSystems Holdings and Toro 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.