Correlation Between Toro and Vipshop Holdings
Can any of the company-specific risk be diversified away by investing in both Toro and Vipshop Holdings 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 Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toro Co and Vipshop Holdings Limited, you can compare the effects of market volatilities on Toro and Vipshop Holdings 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 Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toro and Vipshop Holdings.
Diversification Opportunities for Toro and Vipshop Holdings
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Toro and Vipshop is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Toro Co and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings 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 Vipshop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vipshop Holdings has no effect on the direction of Toro i.e., Toro and Vipshop Holdings go up and down completely randomly.
Pair Corralation between Toro and Vipshop Holdings
Considering the 90-day investment horizon Toro Co is expected to under-perform the Vipshop Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Toro Co is 1.41 times less risky than Vipshop Holdings. The stock trades about -0.03 of its potential returns per unit of risk. The Vipshop Holdings Limited is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,785 in Vipshop Holdings Limited on January 24, 2024 and sell it today you would lose (225.00) from holding Vipshop Holdings Limited or give up 12.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toro Co vs. Vipshop Holdings Limited
Performance |
| Timeline |
| Toro |
| Vipshop Holdings |
Toro and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toro and Vipshop Holdings
The main advantage of trading using opposite Toro and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toro position performs unexpectedly, Vipshop Holdings 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 Vipshop Holdings will offset losses from the drop in Vipshop Holdings' long position.The idea behind Toro Co and Vipshop Holdings Limited 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.| Vipshop Holdings vs. Appian Corp | Vipshop Holdings vs. Okta Inc | Vipshop Holdings vs. MongoDB | Vipshop Holdings vs. Twilio Inc |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |