Correlation Between Toyota and Hyzon Motors
Can any of the company-specific risk be diversified away by investing in both Toyota and Hyzon Motors 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 Toyota and Hyzon Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toyota Motor and Hyzon Motors, you can compare the effects of market volatilities on Toyota and Hyzon Motors 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 Toyota with a short position of Hyzon Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyota and Hyzon Motors.
Diversification Opportunities for Toyota and Hyzon Motors
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Toyota and Hyzon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor and Hyzon Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyzon Motors and Toyota 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 Toyota Motor are associated (or correlated) with Hyzon Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyzon Motors has no effect on the direction of Toyota i.e., Toyota and Hyzon Motors go up and down completely randomly.
Pair Corralation between Toyota and Hyzon Motors
Allowing for the 90-day total investment horizon Toyota Motor is expected to generate 0.2 times more return on investment than Hyzon Motors. However, Toyota Motor is 4.93 times less risky than Hyzon Motors. It trades about 0.03 of its potential returns per unit of risk. Hyzon Motors is currently generating about -0.06 per unit of risk. If you would invest 13,878 in Toyota Motor on September 3, 2024 and sell it today you would earn a total of 3,185 from holding Toyota Motor or generate 22.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toyota Motor vs. Hyzon Motors
Performance |
| Timeline |
| Toyota Motor |
| Hyzon Motors |
Toyota and Hyzon Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toyota and Hyzon Motors
The main advantage of trading using opposite Toyota and Hyzon Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toyota position performs unexpectedly, Hyzon Motors 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 Hyzon Motors will offset losses from the drop in Hyzon Motors' long position.| Toyota vs. GreenPower Motor | Toyota vs. Li Auto | Toyota vs. ZEEKR Intelligent Technology | Toyota vs. Volcon Inc |
| Hyzon Motors vs. Mullen Automotive | Hyzon Motors vs. Canoo Inc | Hyzon Motors vs. Faraday Future Intelligent | Hyzon Motors vs. Polestar Automotive 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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