Correlation Between Toyota Industries and Lion Electric
Can any of the company-specific risk be diversified away by investing in both Toyota Industries and Lion Electric 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 Industries and Lion Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toyota Industries and Lion Electric Corp, you can compare the effects of market volatilities on Toyota Industries and Lion Electric 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 Industries with a short position of Lion Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyota Industries and Lion Electric.
Diversification Opportunities for Toyota Industries and Lion Electric
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Toyota and Lion is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Industries and Lion Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Electric Corp and Toyota Industries 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 Industries are associated (or correlated) with Lion Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Electric Corp has no effect on the direction of Toyota Industries i.e., Toyota Industries and Lion Electric go up and down completely randomly.
Pair Corralation between Toyota Industries and Lion Electric
Assuming the 90 days horizon Toyota Industries is expected to generate 0.45 times more return on investment than Lion Electric. However, Toyota Industries is 2.2 times less risky than Lion Electric. It trades about 0.04 of its potential returns per unit of risk. Lion Electric Corp is currently generating about -0.08 per unit of risk. If you would invest 5,453 in Toyota Industries on August 28, 2024 and sell it today you would earn a total of 2,080 from holding Toyota Industries or generate 38.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toyota Industries vs. Lion Electric Corp
Performance |
| Timeline |
| Toyota Industries |
| Lion Electric Corp |
Toyota Industries and Lion Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toyota Industries and Lion Electric
The main advantage of trading using opposite Toyota Industries and Lion Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toyota Industries position performs unexpectedly, Lion Electric 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 Lion Electric will offset losses from the drop in Lion Electric's long position.| Toyota Industries vs. Isuzu Motors | Toyota Industries vs. Renault SA | Toyota Industries vs. Toyota Motor Corp | Toyota Industries vs. Porsche Automobile Holding |
| Lion Electric vs. Xos Inc | Lion Electric vs. Nikola Corp | Lion Electric vs. Wabash National | Lion Electric vs. American Premium Water |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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