Correlation Between Postal Realty and Toro

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

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

Diversification Opportunities for Postal Realty and Toro

-0.67

Correlation Coefficient

Postal Realty  Toro

Excellent diversification

The 3 months correlation between Postal and Toro is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Postal Realty Trust and Toro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro and Postal Realty 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 Postal Realty Trust 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 Postal Realty i.e., Postal Realty and Toro go up and down completely randomly.

Pair Corralation between Postal Realty and Toro

Given the investment horizon of 90 days Postal Realty Trust is expected to generate 1.13 times more return on investment than Toro. However, Postal Realty is 1.13 times more volatile than Toro Co. It trades about 0.09 of its potential returns per unit of risk. Toro Co is currently generating about -0.07 per unit of risk. If you would invest  1,271  in Postal Realty Trust on December 28, 2024 and sell it today you would earn a total of  134.00  from holding Postal Realty Trust or generate 10.54% return on investment over 90 days.

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

Postal Realty Trust  vs.  Toro Co

Postal Realty Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Realty Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Postal Realty may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Postal Realty and Toro

The main advantage of trading using opposite Postal Realty and Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postal Realty 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 Postal Realty Trust 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.