Correlation Between Suzuki and Mazda
Can any of the company-specific risk be diversified away by investing in both Suzuki and Mazda 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 Suzuki and Mazda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suzuki Motor Corp and Mazda Motor Corp, you can compare the effects of market volatilities on Suzuki and Mazda 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 Suzuki with a short position of Mazda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzuki and Mazda.
Diversification Opportunities for Suzuki and Mazda
Poor diversification
The 3 months correlation between Suzuki and Mazda is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Suzuki Motor Corp and Mazda Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mazda Motor Corp and Suzuki 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 Suzuki Motor Corp are associated (or correlated) with Mazda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mazda Motor Corp has no effect on the direction of Suzuki i.e., Suzuki and Mazda go up and down completely randomly.
Pair Corralation between Suzuki and Mazda
Assuming the 90 days horizon Suzuki Motor Corp is expected to generate 0.9 times more return on investment than Mazda. However, Suzuki Motor Corp is 1.11 times less risky than Mazda. It trades about 0.14 of its potential returns per unit of risk. Mazda Motor Corp is currently generating about -0.2 per unit of risk. If you would invest 3,995 in Suzuki Motor Corp on August 28, 2024 and sell it today you would earn a total of 246.00 from holding Suzuki Motor Corp or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Suzuki Motor Corp vs. Mazda Motor Corp
Performance |
| Timeline |
| Suzuki Motor Corp |
| Mazda Motor Corp |
Suzuki and Mazda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suzuki and Mazda
The main advantage of trading using opposite Suzuki and Mazda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suzuki position performs unexpectedly, Mazda 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 Mazda will offset losses from the drop in Mazda's long position.| Suzuki vs. Isuzu Motors | Suzuki vs. Honda Motor Co | Suzuki vs. Porsche Automobil Holding | Suzuki vs. Mazda Motor Corp |
| Mazda vs. Subaru Corp ADR | Mazda vs. Suzuki Motor Corp | Mazda vs. Isuzu Motors | Mazda vs. Bayerische Motoren Werke |
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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