Correlation Between Toll Brothers and AGRICULTBK HADR25

Can any of the company-specific risk be diversified away by investing in both Toll Brothers and AGRICULTBK HADR25 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 Toll Brothers and AGRICULTBK HADR25 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Toll Brothers and AGRICULTBK HADR25 YC, you can compare the effects of market volatilities on Toll Brothers and AGRICULTBK HADR25 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 Toll Brothers with a short position of AGRICULTBK HADR25. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toll Brothers and AGRICULTBK HADR25.

Diversification Opportunities for Toll Brothers and AGRICULTBK HADR25

-0.7

Correlation Coefficient

Toll Brothers  AGRICULTBK HADR25

Excellent diversification

The 3 months correlation between Toll and AGRICULTBK is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Toll Brothers and AGRICULTBK HADR25 YC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGRICULTBK HADR25 and Toll Brothers 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 Toll Brothers are associated (or correlated) with AGRICULTBK HADR25. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGRICULTBK HADR25 has no effect on the direction of Toll Brothers i.e., Toll Brothers and AGRICULTBK HADR25 go up and down completely randomly.

Pair Corralation between Toll Brothers and AGRICULTBK HADR25

Assuming the 90 days horizon Toll Brothers is expected to generate 0.91 times more return on investment than AGRICULTBK HADR25. However, Toll Brothers is 1.1 times less risky than AGRICULTBK HADR25. It trades about 0.15 of its potential returns per unit of risk. AGRICULTBK HADR25 YC is currently generating about -0.04 per unit of risk. If you would invest  12,322  in Toll Brothers on October 26, 2024 and sell it today you would earn a total of  788.00  from holding Toll Brothers or generate 6.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Toll Brothers  vs.  AGRICULTBK HADR25 YC

Toll Brothers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toll Brothers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Toll Brothers is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

AGRICULTBK HADR25

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AGRICULTBK HADR25 YC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AGRICULTBK HADR25 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toll Brothers and AGRICULTBK HADR25

The main advantage of trading using opposite Toll Brothers and AGRICULTBK HADR25 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toll Brothers position performs unexpectedly, AGRICULTBK HADR25 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 AGRICULTBK HADR25 will offset losses from the drop in AGRICULTBK HADR25's long position.

The idea behind Toll Brothers and AGRICULTBK HADR25 YC 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.