Correlation Between Toys R and Catalyst Metals
Can any of the company-specific risk be diversified away by investing in both Toys R and Catalyst Metals 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 Catalyst Metals 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 Catalyst Metals, you can compare the effects of market volatilities on Toys R and Catalyst Metals 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 Catalyst Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toys R and Catalyst Metals.
Diversification Opportunities for Toys R and Catalyst Metals
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Toys and Catalyst is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Toys R Us and Catalyst Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Metals 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 Catalyst Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Metals has no effect on the direction of Toys R i.e., Toys R and Catalyst Metals go up and down completely randomly.
Pair Corralation between Toys R and Catalyst Metals
Assuming the 90 days trading horizon Toys R Us is expected to under-perform the Catalyst Metals. But the stock apears to be less risky and, when comparing its historical volatility, Toys R Us is 1.07 times less risky than Catalyst Metals. The stock trades about -0.08 of its potential returns per unit of risk. The Catalyst Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 281.00 in Catalyst Metals on September 15, 2024 and sell it today you would earn a total of 9.00 from holding Catalyst Metals or generate 3.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Toys R Us vs. Catalyst Metals
Performance |
Timeline |
Toys R Us |
Catalyst Metals |
Toys R and Catalyst Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Toys R and Catalyst Metals
The main advantage of trading using opposite Toys R and Catalyst Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toys R position performs unexpectedly, Catalyst Metals 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 Catalyst Metals will offset losses from the drop in Catalyst Metals' long position.Toys R vs. Energy Resources | Toys R vs. 88 Energy | Toys R vs. Amani Gold | Toys R vs. A1 Investments Resources |
Catalyst Metals vs. Perseus Mining | Catalyst Metals vs. Toys R Us | Catalyst Metals vs. Skycity Entertainment Group | Catalyst Metals vs. Beston Global Food |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Stocks Directory Find actively traded stocks across global markets | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |