Correlation Between Bon Natural and Tootsie Roll

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

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

Diversification Opportunities for Bon Natural and Tootsie Roll

-0.53

Correlation Coefficient

Bon Natural  Tootsie Roll

Excellent diversification

The 3 months correlation between Bon and Tootsie is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bon Natural Life and Tootsie Roll Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tootsie Roll Industries and Bon Natural 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 Bon Natural Life are associated (or correlated) with Tootsie Roll. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tootsie Roll Industries has no effect on the direction of Bon Natural i.e., Bon Natural and Tootsie Roll go up and down completely randomly.

Pair Corralation between Bon Natural and Tootsie Roll

Considering the 90-day investment horizon Bon Natural Life is expected to under-perform the Tootsie Roll. In addition to that, Bon Natural is 10.58 times more volatile than Tootsie Roll Industries. It trades about -0.17 of its total potential returns per unit of risk. Tootsie Roll Industries is currently generating about 0.11 per unit of volatility. If you would invest  3,035  in Tootsie Roll Industries on February 2, 2025 and sell it today you would earn a total of  329.00  from holding Tootsie Roll Industries or generate 10.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bon Natural Life  vs.  Tootsie Roll Industries

Bon Natural Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bon Natural Life has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Tootsie Roll Industries

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tootsie Roll Industries are ranked lower than 8 (%) 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 June 2025.

Pair Trading with Bon Natural and Tootsie Roll

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

The idea behind Bon Natural Life and Tootsie Roll 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.