Correlation Between Toyota and Hershey
Can any of the company-specific risk be diversified away by investing in both Toyota and Hershey 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 Hershey 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 Hershey Co, you can compare the effects of market volatilities on Toyota and Hershey 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 Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyota and Hershey.
Diversification Opportunities for Toyota and Hershey
Excellent diversification
The 3 months correlation between Toyota and Hershey is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor Corp and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey 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 Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Toyota i.e., Toyota and Hershey go up and down completely randomly.
Pair Corralation between Toyota and Hershey
Assuming the 90 days trading horizon Toyota Motor Corp is expected to generate 1.69 times more return on investment than Hershey. However, Toyota is 1.69 times more volatile than Hershey Co. It trades about 0.05 of its potential returns per unit of risk. Hershey Co is currently generating about -0.06 per unit of risk. If you would invest 180,666 in Toyota Motor Corp on November 7, 2024 and sell it today you would earn a total of 109,016 from holding Toyota Motor Corp or generate 60.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.37% |
| Values | Daily Returns |
Toyota Motor Corp vs. Hershey Co
Performance |
| Timeline |
| Toyota Motor Corp |
| Hershey |
Toyota and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toyota and Hershey
The main advantage of trading using opposite Toyota and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toyota position performs unexpectedly, Hershey 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 Hershey will offset losses from the drop in Hershey's long position.| Toyota vs. Chrysalis Investments | Toyota vs. Mobius Investment Trust | Toyota vs. EJF Investments | Toyota vs. Kaufman Et Broad |
| Hershey vs. Public Storage | Hershey vs. Telecom Italia SpA | Hershey vs. Spirent Communications plc | Hershey vs. Aeorema Communications Plc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |