Correlation Between Marcopolo and Toyota
Can any of the company-specific risk be diversified away by investing in both Marcopolo 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 Marcopolo and Toyota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marcopolo SA and Toyota Motor, you can compare the effects of market volatilities on Marcopolo 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 Marcopolo with a short position of Toyota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marcopolo and Toyota.
Diversification Opportunities for Marcopolo and Toyota
Good diversification
The 3 months correlation between Marcopolo and Toyota is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Marcopolo SA and Toyota Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor and Marcopolo 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 Marcopolo SA 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 has no effect on the direction of Marcopolo i.e., Marcopolo and Toyota go up and down completely randomly.
Pair Corralation between Marcopolo and Toyota
Assuming the 90 days trading horizon Marcopolo SA is expected to generate 1.43 times more return on investment than Toyota. However, Marcopolo is 1.43 times more volatile than Toyota Motor. It trades about 0.09 of its potential returns per unit of risk. Toyota Motor is currently generating about 0.03 per unit of risk. If you would invest 537.00 in Marcopolo SA on September 2, 2024 and sell it today you would earn a total of 322.00 from holding Marcopolo SA or generate 59.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Marcopolo SA vs. Toyota Motor
Performance |
| Timeline |
| Marcopolo SA |
| Toyota Motor |
Marcopolo and Toyota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marcopolo and Toyota
The main advantage of trading using opposite Marcopolo and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marcopolo 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.| Marcopolo vs. Randon SA Implementos | Marcopolo vs. Metalurgica Gerdau SA | Marcopolo vs. CCR SA | Marcopolo vs. Iochpe Maxion SA |
| Toyota vs. Marcopolo SA | Toyota vs. Randon SA Implementos | Toyota vs. Randon SA Implementos | Toyota vs. Klabin SA |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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