Correlation Between Russel Metals and Toromont Industries

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

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

Diversification Opportunities for Russel Metals and Toromont Industries

0.0

Correlation Coefficient

Russel Metals  Toromont Industries

Pay attention - limited upside

The 3 months correlation between Russel and Toromont is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Russel Metals and Toromont Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toromont Industries and Russel Metals 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 Russel Metals are associated (or correlated) with Toromont Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toromont Industries has no effect on the direction of Russel Metals i.e., Russel Metals and Toromont Industries go up and down completely randomly.

Pair Corralation between Russel Metals and Toromont Industries

If you would invest  8,450  in Toromont Industries on May 5, 2025 and sell it today you would earn a total of  1,586  from holding Toromont Industries or generate 18.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Russel Metals  vs.  Toromont Industries

Russel Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Russel Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Russel Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Toromont Industries

Risk-Adjusted Performance

Solid

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

Pair Trading with Russel Metals and Toromont Industries

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

The idea behind Russel Metals and Toromont Industries 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 Anywhere module to track or share privately all of your investments from the convenience of any device.