Correlation Between Yamaha and Peloton Interactive
Can any of the company-specific risk be diversified away by investing in both Yamaha and Peloton Interactive 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 Yamaha and Peloton Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yamaha and Peloton Interactive, you can compare the effects of market volatilities on Yamaha and Peloton Interactive 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 Yamaha with a short position of Peloton Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yamaha and Peloton Interactive.
Diversification Opportunities for Yamaha and Peloton Interactive
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Yamaha and Peloton is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Yamaha and Peloton Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peloton Interactive and Yamaha 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 Yamaha are associated (or correlated) with Peloton Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peloton Interactive has no effect on the direction of Yamaha i.e., Yamaha and Peloton Interactive go up and down completely randomly.
Pair Corralation between Yamaha and Peloton Interactive
Assuming the 90 days horizon Yamaha is expected to under-perform the Peloton Interactive. But the stock apears to be less risky and, when comparing its historical volatility, Yamaha is 2.96 times less risky than Peloton Interactive. The stock trades about -0.05 of its potential returns per unit of risk. The Peloton Interactive is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,172 in Peloton Interactive on August 30, 2024 and sell it today you would lose (252.00) from holding Peloton Interactive or give up 21.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yamaha vs. Peloton Interactive
Performance |
| Timeline |
| Yamaha |
| Peloton Interactive |
Yamaha and Peloton Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yamaha and Peloton Interactive
The main advantage of trading using opposite Yamaha and Peloton Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yamaha position performs unexpectedly, Peloton Interactive 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 Peloton Interactive will offset losses from the drop in Peloton Interactive's long position.| Yamaha vs. Li Ning Company | Yamaha vs. Superior Plus Corp | Yamaha vs. NMI Holdings | Yamaha vs. SIVERS SEMICONDUCTORS AB |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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