Correlation Between Toyota and Magnora ASA
Can any of the company-specific risk be diversified away by investing in both Toyota and Magnora ASA 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 Magnora ASA 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 Magnora ASA, you can compare the effects of market volatilities on Toyota and Magnora ASA 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 Magnora ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyota and Magnora ASA.
Diversification Opportunities for Toyota and Magnora ASA
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Toyota and Magnora is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor Corp and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora ASA 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 Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of Toyota i.e., Toyota and Magnora ASA go up and down completely randomly.
Pair Corralation between Toyota and Magnora ASA
Assuming the 90 days trading horizon Toyota is expected to generate 2.1 times less return on investment than Magnora ASA. But when comparing it to its historical volatility, Toyota Motor Corp is 2.4 times less risky than Magnora ASA. It trades about 0.02 of its potential returns per unit of risk. Magnora ASA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,780 in Magnora ASA on August 26, 2024 and sell it today you would lose (395.00) from holding Magnora ASA or give up 14.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.41% |
| Values | Daily Returns |
Toyota Motor Corp vs. Magnora ASA
Performance |
| Timeline |
| Toyota Motor Corp |
| Magnora ASA |
Toyota and Magnora ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toyota and Magnora ASA
The main advantage of trading using opposite Toyota and Magnora ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toyota position performs unexpectedly, Magnora ASA 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 Magnora ASA will offset losses from the drop in Magnora ASA's long position.| Toyota vs. Synchrony Financial | Toyota vs. St Galler Kantonalbank | Toyota vs. Prudential Financial | Toyota vs. Bank of Ireland |
| Magnora ASA vs. Samsung Electronics Co | Magnora ASA vs. Samsung Electronics Co | Magnora ASA vs. Hyundai Motor | Magnora ASA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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