Correlation Between Toyota and Blue Star

Can any of the company-specific risk be diversified away by investing in both Toyota and Blue Star 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 Blue Star 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 Blue Star Capital, you can compare the effects of market volatilities on Toyota and Blue Star 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 Blue Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toyota and Blue Star.

Diversification Opportunities for Toyota and Blue Star

0.17

Correlation Coefficient

Toyota  Blue Star

Average diversification

The 3 months correlation between Toyota and Blue is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor Corp and Blue Star Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Star Capital 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 Blue Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Star Capital has no effect on the direction of Toyota i.e., Toyota and Blue Star go up and down completely randomly.

Pair Corralation between Toyota and Blue Star

Assuming the 90 days trading horizon Toyota Motor Corp is expected to generate 0.14 times more return on investment than Blue Star. However, Toyota Motor Corp is 7.15 times less risky than Blue Star. It trades about 0.12 of its potential returns per unit of risk. Blue Star Capital is currently generating about 0.02 per unit of risk. If you would invest  254,250  in Toyota Motor Corp on September 28, 2024 and sell it today you would earn a total of  22,900  from holding Toyota Motor Corp or generate 9.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Toyota Motor Corp  vs.  Blue Star Capital

Toyota Motor Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Toyota Motor Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Toyota may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Blue Star Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Star Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Blue Star may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Toyota and Blue Star

The main advantage of trading using opposite Toyota and Blue Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toyota position performs unexpectedly, Blue Star 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 Blue Star will offset losses from the drop in Blue Star's long position.

The idea behind Toyota Motor Corp and Blue Star Capital 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.