Correlation Between Toray Industries and Dixie

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

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

Diversification Opportunities for Toray Industries and Dixie

0.11

Correlation Coefficient

Toray Industries  Dixie

Average diversification

The 3 months correlation between Toray and Dixie is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Toray Industries and The Dixie Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixie Group and Toray Industries 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 Toray Industries are associated (or correlated) with Dixie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixie Group has no effect on the direction of Toray Industries i.e., Toray Industries and Dixie go up and down completely randomly.

Pair Corralation between Toray Industries and Dixie

If you would invest  560.00  in Toray Industries on September 27, 2024 and sell it today you would earn a total of  86.00  from holding Toray Industries or generate 15.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Toray Industries  vs.  The Dixie Group

Toray Industries

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Toray Industries are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Toray Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Dixie Group

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days The Dixie Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Dixie displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toray Industries and Dixie

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

The idea behind Toray Industries and The Dixie Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.