Correlation Between SL Green and Taronis Fuels

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Can any of the company-specific risk be diversified away by investing in both SL Green and Taronis Fuels 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 SL Green and Taronis Fuels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SL Green Realty and Taronis Fuels, you can compare the effects of market volatilities on SL Green and Taronis Fuels 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 SL Green with a short position of Taronis Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Taronis Fuels.

Diversification Opportunities for SL Green and Taronis Fuels

0.54
  Correlation Coefficient

Very weak diversification

The 3 months correlation between SLG and Taronis is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Taronis Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taronis Fuels and SL Green 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 SL Green Realty are associated (or correlated) with Taronis Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taronis Fuels has no effect on the direction of SL Green i.e., SL Green and Taronis Fuels go up and down completely randomly.

Pair Corralation between SL Green and Taronis Fuels

Considering the 90-day investment horizon SL Green is expected to generate 127.16 times less return on investment than Taronis Fuels. But when comparing it to its historical volatility, SL Green Realty is 46.95 times less risky than Taronis Fuels. It trades about 0.06 of its potential returns per unit of risk. Taronis Fuels is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  5.61  in Taronis Fuels on October 10, 2024 and sell it today you would lose (5.60) from holding Taronis Fuels or give up 99.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy82.02%
ValuesDaily Returns

SL Green Realty  vs.  Taronis Fuels

 Performance 
       Timeline  
SL Green Realty 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, SL Green is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Taronis Fuels 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Taronis Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Taronis Fuels is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

SL Green and Taronis Fuels Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SL Green and Taronis Fuels

The main advantage of trading using opposite SL Green and Taronis Fuels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, Taronis Fuels 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 Taronis Fuels will offset losses from the drop in Taronis Fuels' long position.
The idea behind SL Green Realty and Taronis Fuels 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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