Correlation Between Toro and Hillman Solutions

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

By analyzing existing cross correlation between Toro Co and Hillman Solutions Corp, you can compare the effects of market volatilities on Toro and Hillman Solutions 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 Toro with a short position of Hillman Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toro and Hillman Solutions.

Diversification Opportunities for Toro and Hillman Solutions

-0.1

Correlation Coefficient

Toro  Hillman Solutions

Good diversification

The 3 months correlation between Toro and Hillman is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Toro Co and Hillman Solutions Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillman Solutions Corp and Toro 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 Toro Co are associated (or correlated) with Hillman Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillman Solutions Corp has no effect on the direction of Toro i.e., Toro and Hillman Solutions go up and down completely randomly.

Pair Corralation between Toro and Hillman Solutions

Considering the 90-day investment horizon Toro Co is expected to under-perform the Hillman Solutions. In addition to that, Toro is 1.1 times more volatile than Hillman Solutions Corp. It trades about -0.03 of its total potential returns per unit of risk. Hillman Solutions Corp is currently generating about 0.15 per unit of volatility. If you would invest  975.00  in Hillman Solutions Corp on September 2, 2024 and sell it today you would earn a total of  165.00  from holding Hillman Solutions Corp or generate 16.92% return on investment over 90 days.

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

Toro Co  vs.  Hillman Solutions Corp

Toro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toro Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Toro is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Hillman Solutions Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hillman Solutions Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Hillman Solutions displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toro and Hillman Solutions

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

The idea behind Toro Co and Hillman Solutions Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..