Correlation Between Isuzu Motors and Subaru Corp
Can any of the company-specific risk be diversified away by investing in both Isuzu Motors and Subaru Corp 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 Isuzu Motors and Subaru Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Isuzu Motors and Subaru Corp, you can compare the effects of market volatilities on Isuzu Motors and Subaru Corp 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 Isuzu Motors with a short position of Subaru Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Isuzu Motors and Subaru Corp.
Diversification Opportunities for Isuzu Motors and Subaru Corp
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Isuzu and Subaru is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Isuzu Motors and Subaru Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Subaru Corp and Isuzu Motors 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 Isuzu Motors are associated (or correlated) with Subaru Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Subaru Corp has no effect on the direction of Isuzu Motors i.e., Isuzu Motors and Subaru Corp go up and down completely randomly.
Pair Corralation between Isuzu Motors and Subaru Corp
Assuming the 90 days horizon Isuzu Motors is expected to generate 0.41 times more return on investment than Subaru Corp. However, Isuzu Motors is 2.46 times less risky than Subaru Corp. It trades about 0.1 of its potential returns per unit of risk. Subaru Corp is currently generating about -0.05 per unit of risk. If you would invest 1,292 in Isuzu Motors on August 28, 2024 and sell it today you would earn a total of 48.00 from holding Isuzu Motors or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Isuzu Motors vs. Subaru Corp
Performance |
| Timeline |
| Isuzu Motors |
| Subaru Corp |
Isuzu Motors and Subaru Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Isuzu Motors and Subaru Corp
The main advantage of trading using opposite Isuzu Motors and Subaru Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Isuzu Motors position performs unexpectedly, Subaru Corp 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 Subaru Corp will offset losses from the drop in Subaru Corp's long position.| Isuzu Motors vs. Suzuki Motor Corp | Isuzu Motors vs. Mitsubishi Estate Co | Isuzu Motors vs. Daiwa House Industry | Isuzu Motors vs. Mitsubishi Electric Corp |
| Subaru Corp vs. Isuzu Motors | Subaru Corp vs. Renault SA | Subaru Corp vs. Toyota Motor Corp | Subaru Corp vs. Porsche Automobile Holding |
Check out your portfolio center.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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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