Correlation Between Toyota and Old Mutual
Can any of the company-specific risk be diversified away by investing in both Toyota and Old Mutual 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 Old Mutual 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 Old Mutual, you can compare the effects of market volatilities on Toyota and Old Mutual 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 Old Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyota and Old Mutual.
Diversification Opportunities for Toyota and Old Mutual
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Toyota and Old is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor Corp and Old Mutual in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Mutual 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 Old Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Mutual has no effect on the direction of Toyota i.e., Toyota and Old Mutual go up and down completely randomly.
Pair Corralation between Toyota and Old Mutual
Assuming the 90 days trading horizon Toyota is expected to generate 4.01 times less return on investment than Old Mutual. But when comparing it to its historical volatility, Toyota Motor Corp is 3.04 times less risky than Old Mutual. It trades about 0.04 of its potential returns per unit of risk. Old Mutual is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,629 in Old Mutual on September 5, 2024 and sell it today you would earn a total of 4,021 from holding Old Mutual or generate 246.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.39% |
| Values | Daily Returns |
Toyota Motor Corp vs. Old Mutual
Performance |
| Timeline |
| Toyota Motor Corp |
| Old Mutual |
Toyota and Old Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toyota and Old Mutual
The main advantage of trading using opposite Toyota and Old Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toyota position performs unexpectedly, Old Mutual 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 Old Mutual will offset losses from the drop in Old Mutual's long position.| Toyota vs. Wyndham Hotels Resorts | Toyota vs. Host Hotels Resorts | Toyota vs. Primary Health Properties | Toyota vs. Eco Animal Health |
| Old Mutual vs. Toyota Motor Corp | Old Mutual vs. SoftBank Group Corp | Old Mutual vs. Fannie Mae | Old Mutual vs. Panasonic 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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