Correlation Between Winnebago Industries and Toro

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Can any of the company-specific risk be diversified away by investing in both Winnebago Industries and Toro 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 Winnebago Industries and Toro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Winnebago Industries and Toro Co, you can compare the effects of market volatilities on Winnebago Industries and Toro 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 Winnebago Industries with a short position of Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Winnebago Industries and Toro.

Diversification Opportunities for Winnebago Industries and Toro

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Winnebago and Toro is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Winnebago Industries and Toro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro and Winnebago 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 Winnebago Industries are associated (or correlated) with Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of Winnebago Industries i.e., Winnebago Industries and Toro go up and down completely randomly.

Pair Corralation between Winnebago Industries and Toro

Considering the 90-day investment horizon Winnebago Industries is expected to generate 1.44 times more return on investment than Toro. However, Winnebago Industries is 1.44 times more volatile than Toro Co. It trades about 0.04 of its potential returns per unit of risk. Toro Co is currently generating about -0.04 per unit of risk. If you would invest  7,115  in Winnebago Industries on December 29, 2023 and sell it today you would earn a total of  108.00  from holding Winnebago Industries or generate 1.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Winnebago Industries  vs.  Toro Co

 Performance 
       Timeline  
Winnebago Industries 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Winnebago Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Winnebago Industries is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Toro 

Risk-Adjusted Performance

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Low
 
High
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.

Winnebago Industries and Toro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Winnebago Industries and Toro

The main advantage of trading using opposite Winnebago Industries and Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Winnebago Industries position performs unexpectedly, Toro 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 Toro will offset losses from the drop in Toro's long position.
The idea behind Winnebago Industries and Toro Co 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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