Correlation Between Tootsie Roll and Hershey

Can any of the company-specific risk be diversified away by investing in both Tootsie Roll and Hershey 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 Hershey 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 Hershey Co, you can compare the effects of market volatilities on Tootsie Roll and Hershey 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 Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tootsie Roll and Hershey.

Diversification Opportunities for Tootsie Roll and Hershey

0.73

Correlation Coefficient

Tootsie Roll  Hershey

Poor diversification

The 3 months correlation between Tootsie and Hershey is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tootsie Roll Industries and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey 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 Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Tootsie Roll i.e., Tootsie Roll and Hershey go up and down completely randomly.

Pair Corralation between Tootsie Roll and Hershey

Allowing for the 90-day total investment horizon Tootsie Roll Industries is expected to generate 0.95 times more return on investment than Hershey. However, Tootsie Roll Industries is 1.05 times less risky than Hershey. It trades about 0.16 of its potential returns per unit of risk. Hershey Co is currently generating about 0.12 per unit of risk. If you would invest  3,293  in Tootsie Roll Industries on May 7, 2025 and sell it today you would earn a total of  568.00  from holding Tootsie Roll Industries or generate 17.25% return on investment over 90 days.

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

Tootsie Roll Industries  vs.  Hershey Co

Tootsie Roll Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tootsie Roll Industries are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Tootsie Roll reported solid returns over the last few months and may actually be approaching a breakup point.

Hershey

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Hershey Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hershey showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tootsie Roll and Hershey

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

The idea behind Tootsie Roll Industries and Hershey 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.