Correlation Between Toyota and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Toyota and AMG Advanced 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 AMG Advanced 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 AMG Advanced Metallurgical, you can compare the effects of market volatilities on Toyota and AMG Advanced 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 AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyota and AMG Advanced.
Diversification Opportunities for Toyota and AMG Advanced
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Toyota and AMG is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor Corp and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu 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 AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of Toyota i.e., Toyota and AMG Advanced go up and down completely randomly.
Pair Corralation between Toyota and AMG Advanced
Assuming the 90 days trading horizon Toyota Motor Corp is expected to generate 0.51 times more return on investment than AMG Advanced. However, Toyota Motor Corp is 1.96 times less risky than AMG Advanced. It trades about 0.11 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.17 per unit of risk. If you would invest 260,250 in Toyota Motor Corp on August 29, 2024 and sell it today you would earn a total of 6,200 from holding Toyota Motor Corp or generate 2.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Toyota Motor Corp vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| Toyota Motor Corp |
| AMG Advanced Metallu |
Toyota and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toyota and AMG Advanced
The main advantage of trading using opposite Toyota and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toyota position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.The idea behind Toyota Motor Corp and AMG Advanced Metallurgical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AMG Advanced vs. Samsung Electronics Co | AMG Advanced vs. Samsung Electronics Co | AMG Advanced vs. Hyundai Motor | AMG Advanced 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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