Correlation Between Proficient Auto and Tootsie Roll

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

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

Diversification Opportunities for Proficient Auto and Tootsie Roll

0.07

Correlation Coefficient

Proficient Auto  Tootsie Roll

Significant diversification

The 3 months correlation between Proficient and Tootsie is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Proficient Auto Logistics, 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 Proficient Auto 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 Proficient Auto Logistics, 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 Proficient Auto i.e., Proficient Auto and Tootsie Roll go up and down completely randomly.

Pair Corralation between Proficient Auto and Tootsie Roll

Considering the 90-day investment horizon Proficient Auto Logistics, is expected to under-perform the Tootsie Roll. In addition to that, Proficient Auto is 3.53 times more volatile than Tootsie Roll Industries. It trades about -0.17 of its total potential returns per unit of risk. Tootsie Roll Industries is currently generating about 0.0 per unit of volatility. If you would invest  3,243  in Tootsie Roll Industries on September 12, 2024 and sell it today you would lose (15.00) from holding Tootsie Roll Industries or give up 0.46% of portfolio value over 90 days.

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

Proficient Auto Logistics,  vs.  Tootsie Roll Industries

Proficient Auto Logi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Proficient Auto Logistics, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tootsie Roll Industries

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Tootsie Roll Industries has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Proficient Auto and Tootsie Roll

The main advantage of trading using opposite Proficient Auto and Tootsie Roll positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proficient Auto 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 Proficient Auto Logistics, 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.