Correlation Between Old Mutual and Toyota
Can any of the company-specific risk be diversified away by investing in both Old Mutual and Toyota 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 Old Mutual and Toyota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Mutual and Toyota Motor Corp, you can compare the effects of market volatilities on Old Mutual and Toyota 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 Old Mutual with a short position of Toyota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Mutual and Toyota.
Diversification Opportunities for Old Mutual and Toyota
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Old and Toyota is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Old Mutual and Toyota Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor Corp and Old Mutual 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 Old Mutual are associated (or correlated) with Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor Corp has no effect on the direction of Old Mutual i.e., Old Mutual and Toyota go up and down completely randomly.
Pair Corralation between Old Mutual and Toyota
Assuming the 90 days trading horizon Old Mutual is expected to generate 1.05 times more return on investment than Toyota. However, Old Mutual is 1.05 times more volatile than Toyota Motor Corp. It trades about 0.03 of its potential returns per unit of risk. Toyota Motor Corp is currently generating about 0.02 per unit of risk. If you would invest 5,600 in Old Mutual on September 5, 2024 and sell it today you would earn a total of 50.00 from holding Old Mutual or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Mutual vs. Toyota Motor Corp
Performance |
| Timeline |
| Old Mutual |
| Toyota Motor Corp |
Old Mutual and Toyota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Mutual and Toyota
The main advantage of trading using opposite Old Mutual and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Mutual position performs unexpectedly, Toyota 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 Toyota will offset losses from the drop in Toyota's long position.| Old Mutual vs. Toyota Motor Corp | Old Mutual vs. SoftBank Group Corp | Old Mutual vs. Fannie Mae | Old Mutual vs. Panasonic Corp |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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