Correlation Between Arhaus and Toll Brothers

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

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

Diversification Opportunities for Arhaus and Toll Brothers

0.0

Correlation Coefficient

Arhaus  Toll Brothers

Pay attention - limited upside

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

Pair Corralation between Arhaus and Toll Brothers

If you would invest  936.00  in Arhaus Inc on September 4, 2024 and sell it today you would earn a total of  103.00  from holding Arhaus Inc or generate 11.0% return on investment over 90 days.

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

Arhaus Inc  vs.  Toll Brothers

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Arhaus is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Toll Brothers

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Toll Brothers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Toll Brothers is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Arhaus and Toll Brothers

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

The idea behind Arhaus Inc and Toll Brothers 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 Global Correlations module to find global opportunities by holding instruments from different markets.