Correlation Between Toast and Archer

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

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

Diversification Opportunities for Toast and Archer

0.36

Correlation Coefficient

Toast  Archer

Weak diversification

The 3 months correlation between Toast and Archer is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Toast Inc and Archer Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Limited and Toast 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 Toast Inc are associated (or correlated) with Archer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Limited has no effect on the direction of Toast i.e., Toast and Archer go up and down completely randomly.

Pair Corralation between Toast and Archer

Given the investment horizon of 90 days Toast Inc is expected to under-perform the Archer. In addition to that, Toast is 1.55 times more volatile than Archer Limited. It trades about -0.04 of its total potential returns per unit of risk. Archer Limited is currently generating about 0.01 per unit of volatility. If you would invest  220.00  in Archer Limited on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Archer Limited or generate 0.0% return on investment over 90 days.

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

Toast Inc  vs.  Archer Limited

Toast Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Toast Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Archer Limited

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Toast and Archer

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

The idea behind Toast Inc and Archer Limited 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.