Correlation Between Toro and Eastern

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

By analyzing existing cross correlation between Toro Co and Eastern Co, you can compare the effects of market volatilities on Toro and Eastern 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 Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toro and Eastern.

Diversification Opportunities for Toro and Eastern

0.4

Correlation Coefficient

Toro  Eastern

Very weak diversification

The 3 months correlation between Toro and Eastern is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Toro Co and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Toro i.e., Toro and Eastern go up and down completely randomly.

Pair Corralation between Toro and Eastern

Considering the 90-day investment horizon Toro is expected to generate 1.9 times less return on investment than Eastern. But when comparing it to its historical volatility, Toro Co is 1.28 times less risky than Eastern. It trades about 0.04 of its potential returns per unit of risk. Eastern Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,060  in Eastern Co on May 4, 2025 and sell it today you would earn a total of  143.00  from holding Eastern Co or generate 6.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Toro Co  vs.  Eastern Co

Toro

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Toro Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Toro is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Eastern

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain primary indicators, Eastern may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Toro and Eastern

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

The idea behind Toro Co and Eastern 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.