Correlation Between Toyota and American Tower
Can any of the company-specific risk be diversified away by investing in both Toyota and American Tower 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 American Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Toyota Motor Corp and American Tower REIT, you can compare the effects of market volatilities on Toyota and American Tower 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 American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyota and American Tower.
Diversification Opportunities for Toyota and American Tower
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Toyota and American is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor Corp and American Tower REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower REIT 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 Corp are associated (or correlated) with American Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Tower REIT has no effect on the direction of Toyota i.e., Toyota and American Tower go up and down completely randomly.
Pair Corralation between Toyota and American Tower
Assuming the 90 days trading horizon Toyota Motor Corp is expected to generate 0.8 times more return on investment than American Tower. However, Toyota Motor Corp is 1.25 times less risky than American Tower. It trades about 0.02 of its potential returns per unit of risk. American Tower REIT is currently generating about -0.02 per unit of risk. If you would invest 261,550 in Toyota Motor Corp on September 5, 2024 and sell it today you would earn a total of 1,550 from holding Toyota Motor Corp or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toyota Motor Corp vs. American Tower REIT
Performance |
| Timeline |
| Toyota Motor Corp |
| American Tower REIT |
Toyota and American Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toyota and American Tower
The main advantage of trading using opposite Toyota and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toyota position performs unexpectedly, American Tower 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 American Tower will offset losses from the drop in American Tower's long position.| Toyota vs. Wyndham Hotels Resorts | Toyota vs. Host Hotels Resorts | Toyota vs. Primary Health Properties | Toyota vs. Eco Animal Health |
| American Tower vs. Samsung Electronics Co | American Tower vs. Samsung Electronics Co | American Tower vs. Hyundai Motor | American Tower vs. Toyota Motor Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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