Correlation Between Fisker and Toyota

Can any of the company-specific risk be diversified away by investing in both Fisker 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 Fisker and Toyota into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fisker Inc and Toyota Motor, you can compare the effects of market volatilities on Fisker 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 Fisker with a short position of Toyota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fisker and Toyota.

Diversification Opportunities for Fisker and Toyota

-0.16

Correlation Coefficient

Fisker  Toyota

Good diversification

The 3 months correlation between Fisker and Toyota is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Fisker Inc and Toyota Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor and Fisker 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 Fisker Inc 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 Fisker i.e., Fisker and Toyota go up and down completely randomly.

Pair Corralation between Fisker and Toyota

If you would invest  615.00  in Fisker Inc on September 19, 2024 and sell it today you would earn a total of  0.00  from holding Fisker Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Fisker Inc  vs.  Toyota Motor

Fisker Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fisker Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fisker is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Toyota Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toyota Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Toyota is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fisker and Toyota

The main advantage of trading using opposite Fisker and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fisker 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.

The idea behind Fisker Inc and Toyota Motor 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.

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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.