Correlation Between Guaranty Trust and Toyota

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

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

Diversification Opportunities for Guaranty Trust and Toyota

0.45

Correlation Coefficient

Guaranty Trust  Toyota

Very weak diversification

The 3 months correlation between Guaranty and Toyota is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Guaranty Trust Holding and Toyota Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor Corp and Guaranty Trust 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 Guaranty Trust Holding 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 Corp has no effect on the direction of Guaranty Trust i.e., Guaranty Trust and Toyota go up and down completely randomly.

Pair Corralation between Guaranty Trust and Toyota

Assuming the 90 days trading horizon Guaranty Trust Holding is expected to under-perform the Toyota. In addition to that, Guaranty Trust is 1.26 times more volatile than Toyota Motor Corp. It trades about -0.02 of its total potential returns per unit of risk. Toyota Motor Corp is currently generating about 0.02 per unit of volatility. If you would invest  269,579  in Toyota Motor Corp on September 27, 2024 and sell it today you would earn a total of  7,571  from holding Toyota Motor Corp or generate 2.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.41%
Values	Daily Returns

Guaranty Trust Holding  vs.  Toyota Motor Corp

Guaranty Trust Holding

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guaranty Trust Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Guaranty Trust may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Toyota Motor Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Toyota Motor Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Toyota is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Guaranty Trust and Toyota

The main advantage of trading using opposite Guaranty Trust and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guaranty Trust 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 Guaranty Trust Holding and Toyota Motor Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.