Correlation Between Tootsie Roll and Burcon NutraScience

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

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

Diversification Opportunities for Tootsie Roll and Burcon NutraScience

-0.44

Correlation Coefficient

Tootsie Roll  Burcon NutraScience

Very good diversification

The 3 months correlation between Tootsie and Burcon is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Tootsie Roll Industries and Burcon NutraScience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burcon NutraScience Corp and Tootsie Roll 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 Tootsie Roll Industries are associated (or correlated) with Burcon NutraScience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burcon NutraScience Corp has no effect on the direction of Tootsie Roll i.e., Tootsie Roll and Burcon NutraScience go up and down completely randomly.

Pair Corralation between Tootsie Roll and Burcon NutraScience

If you would invest  2,779  in Tootsie Roll Industries on August 10, 2024 and sell it today you would earn a total of  284.00  from holding Tootsie Roll Industries or generate 10.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Tootsie Roll Industries  vs.  Burcon NutraScience Corp

Tootsie Roll Industries

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tootsie Roll Industries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Tootsie Roll may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Burcon NutraScience Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tootsie Roll and Burcon NutraScience

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

The idea behind Tootsie Roll Industries and Burcon NutraScience 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.