Correlation Between Toys R and Coronado Global

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

By analyzing existing cross correlation between Toys R Us and Coronado Global Resources, you can compare the effects of market volatilities on Toys R and Coronado Global 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 Toys R with a short position of Coronado Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toys R and Coronado Global.

Diversification Opportunities for Toys R and Coronado Global

0.61

Correlation Coefficient

Toys R  Coronado Global

Poor diversification

The 3 months correlation between Toys and Coronado is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Toys R Us and Coronado Global Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coronado Global Resources and Toys R 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 Toys R Us are associated (or correlated) with Coronado Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coronado Global Resources has no effect on the direction of Toys R i.e., Toys R and Coronado Global go up and down completely randomly.

Pair Corralation between Toys R and Coronado Global

Assuming the 90 days trading horizon Toys R Us is expected to under-perform the Coronado Global. In addition to that, Toys R is 1.57 times more volatile than Coronado Global Resources. It trades about -0.14 of its total potential returns per unit of risk. Coronado Global Resources is currently generating about -0.03 per unit of volatility. If you would invest  93.00  in Coronado Global Resources on September 13, 2024 and sell it today you would lose (6.00) from holding Coronado Global Resources or give up 6.45% of portfolio value over 90 days.

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

Toys R Us  vs.  Coronado Global Resources

Toys R Us

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toys R Us has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Coronado Global Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coronado Global Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Coronado Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Toys R and Coronado Global

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

The idea behind Toys R Us and Coronado Global Resources 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.