Correlation Between Tootsie Roll and Dole PLC

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

By analyzing existing cross correlation between Tootsie Roll Industries and Dole PLC, you can compare the effects of market volatilities on Tootsie Roll and Dole PLC 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 Tootsie Roll with a short position of Dole PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tootsie Roll and Dole PLC.

Diversification Opportunities for Tootsie Roll and Dole PLC

-0.62

Correlation Coefficient

Tootsie Roll  Dole PLC

Excellent diversification

The 3 months correlation between Tootsie and Dole is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Tootsie Roll Industries and Dole PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dole PLC and Tootsie Roll 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 Tootsie Roll Industries are associated (or correlated) with Dole PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dole PLC has no effect on the direction of Tootsie Roll i.e., Tootsie Roll and Dole PLC go up and down completely randomly.

Pair Corralation between Tootsie Roll and Dole PLC

Allowing for the 90-day total investment horizon Tootsie Roll Industries is expected to generate 1.22 times more return on investment than Dole PLC. However, Tootsie Roll is 1.22 times more volatile than Dole PLC. It trades about -0.2 of its potential returns per unit of risk. Dole PLC is currently generating about -0.55 per unit of risk. If you would invest  3,292  in Tootsie Roll Industries on October 9, 2024 and sell it today you would lose (203.00) from holding Tootsie Roll Industries or give up 6.17% of portfolio value over 90 days.

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

Tootsie Roll Industries  vs.  Dole PLC

Tootsie Roll Industries

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tootsie Roll Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Tootsie Roll is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Dole PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dole PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Tootsie Roll and Dole PLC

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

The idea behind Tootsie Roll Industries and Dole PLC 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 CEOs Directory module to screen CEOs from public companies around the world.