Correlation Between Toast and Global E

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Can any of the company-specific risk be diversified away by investing in both Toast and Global E 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 Global E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toast Inc and Global E Online, you can compare the effects of market volatilities on Toast and Global E 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 Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toast and Global E.

Diversification Opportunities for Toast and Global E

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Toast and Global is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Toast Inc and Global E Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Online 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 Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Online has no effect on the direction of Toast i.e., Toast and Global E go up and down completely randomly.

Pair Corralation between Toast and Global E

Given the investment horizon of 90 days Toast is expected to generate 1.21 times less return on investment than Global E. In addition to that, Toast is 1.03 times more volatile than Global E Online. It trades about 0.07 of its total potential returns per unit of risk. Global E Online is currently generating about 0.08 per unit of volatility. If you would invest  1,886  in Global E Online on September 14, 2024 and sell it today you would earn a total of  3,672  from holding Global E Online or generate 194.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Toast Inc  vs.  Global E Online

 Performance 
       Timeline  
Toast Inc 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Toast Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Toast unveiled solid returns over the last few months and may actually be approaching a breakup point.
Global E Online 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, Global E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Toast and Global E Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Toast and Global E

The main advantage of trading using opposite Toast and Global E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toast position performs unexpectedly, Global E 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 Global E will offset losses from the drop in Global E's long position.
The idea behind Toast Inc and Global E Online 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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