Correlation Between Toyota and Catena Media
Can any of the company-specific risk be diversified away by investing in both Toyota and Catena Media 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 Catena Media 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 Catena Media PLC, you can compare the effects of market volatilities on Toyota and Catena Media 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 Catena Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyota and Catena Media.
Diversification Opportunities for Toyota and Catena Media
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Toyota and Catena is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor Corp and Catena Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catena Media PLC 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 Catena Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catena Media PLC has no effect on the direction of Toyota i.e., Toyota and Catena Media go up and down completely randomly.
Pair Corralation between Toyota and Catena Media
Assuming the 90 days trading horizon Toyota Motor Corp is expected to generate 0.56 times more return on investment than Catena Media. However, Toyota Motor Corp is 1.79 times less risky than Catena Media. It trades about 0.01 of its potential returns per unit of risk. Catena Media PLC is currently generating about -0.07 per unit of risk. If you would invest 269,579 in Toyota Motor Corp on August 29, 2024 and sell it today you would lose (3,129) from holding Toyota Motor Corp or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.8% |
| Values | Daily Returns |
Toyota Motor Corp vs. Catena Media PLC
Performance |
| Timeline |
| Toyota Motor Corp |
| Catena Media PLC |
Toyota and Catena Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toyota and Catena Media
The main advantage of trading using opposite Toyota and Catena Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toyota position performs unexpectedly, Catena Media 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 Catena Media will offset losses from the drop in Catena Media's long position.The idea behind Toyota Motor Corp and Catena Media PLC 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.| Catena Media vs. Lendinvest PLC | Catena Media vs. Neometals | Catena Media vs. Coor Service Management | Catena Media vs. Albion Technology General |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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