Correlation Between Workhorse and Toyota
Can any of the company-specific risk be diversified away by investing in both Workhorse and Toyota 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 Workhorse and Toyota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workhorse Group and Toyota Motor, you can compare the effects of market volatilities on Workhorse and Toyota 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 Workhorse with a short position of Toyota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workhorse and Toyota.
Diversification Opportunities for Workhorse and Toyota
Very good diversification
The 3 months correlation between Workhorse and Toyota is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Workhorse Group and Toyota Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor and Workhorse 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 Workhorse Group are associated (or correlated) with Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor has no effect on the direction of Workhorse i.e., Workhorse and Toyota go up and down completely randomly.
Pair Corralation between Workhorse and Toyota
Given the investment horizon of 90 days Workhorse Group is expected to under-perform the Toyota. In addition to that, Workhorse is 4.32 times more volatile than Toyota Motor. It trades about -0.08 of its total potential returns per unit of risk. Toyota Motor is currently generating about 0.04 per unit of volatility. If you would invest 13,550 in Toyota Motor on August 27, 2024 and sell it today you would earn a total of 3,890 from holding Toyota Motor or generate 28.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Workhorse Group vs. Toyota Motor
Performance |
| Timeline |
| Workhorse Group |
| Toyota Motor |
Workhorse and Toyota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Workhorse and Toyota
The main advantage of trading using opposite Workhorse and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workhorse position performs unexpectedly, Toyota 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 Toyota will offset losses from the drop in Toyota's long position.| Workhorse vs. Faraday Future Intelligent | Workhorse vs. Mullen Automotive | Workhorse vs. Xpeng Inc | Workhorse vs. Nio Class A |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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