Correlation Between LS Starrett and Toro

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

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

Diversification Opportunities for LS Starrett and Toro

0.0

Correlation Coefficient

LS Starrett  Toro

Pay attention - limited upside

The 3 months correlation between SCX and Toro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LS Starrett and Toro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro and LS Starrett 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 LS Starrett 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 LS Starrett i.e., LS Starrett and Toro go up and down completely randomly.

Pair Corralation between LS Starrett and Toro

If you would invest (100.00) in LS Starrett on December 26, 2024 and sell it today you would earn a total of  100.00  from holding LS Starrett or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

LS Starrett  vs.  Toro Co

LS Starrett

Risk-Adjusted Performance

Very Weak

Over the last 90 days LS Starrett has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, LS Starrett is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 LS Starrett and Toro

The main advantage of trading using opposite LS Starrett and Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS Starrett 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 LS Starrett 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.