Correlation Between Toyota and Bellevue Healthcare

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

Diversification Opportunities for Toyota and Bellevue Healthcare

-0.42

Correlation Coefficient

Toyota  Bellevue Healthcare

Very good diversification

The 3 months correlation between Toyota and Bellevue is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor Corp and Bellevue Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Healthcare Trust 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 Bellevue Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Healthcare Trust has no effect on the direction of Toyota i.e., Toyota and Bellevue Healthcare go up and down completely randomly.

Pair Corralation between Toyota and Bellevue Healthcare

Assuming the 90 days trading horizon Toyota Motor Corp is expected to generate 2.34 times more return on investment than Bellevue Healthcare. However, Toyota is 2.34 times more volatile than Bellevue Healthcare Trust. It trades about -0.05 of its potential returns per unit of risk. Bellevue Healthcare Trust is currently generating about -0.16 per unit of risk. If you would invest  277,958  in Toyota Motor Corp on September 2, 2024 and sell it today you would lose (22,808) from holding Toyota Motor Corp or give up 8.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Toyota Motor Corp  vs.  Bellevue Healthcare Trust

Toyota Motor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Toyota Motor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Bellevue Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bellevue Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Toyota and Bellevue Healthcare

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

The idea behind Toyota Motor Corp and Bellevue Healthcare Trust 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.