Correlation Between Toyota and Deltex Medical

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

Diversification Opportunities for Toyota and Deltex Medical

0.03

Correlation Coefficient

Toyota  Deltex Medical

Significant diversification

The 3 months correlation between Toyota and Deltex is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor Corp and Deltex Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deltex Medical Group 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 Deltex Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deltex Medical Group has no effect on the direction of Toyota i.e., Toyota and Deltex Medical go up and down completely randomly.

Pair Corralation between Toyota and Deltex Medical

Assuming the 90 days trading horizon Toyota Motor Corp is expected to generate 0.19 times more return on investment than Deltex Medical. However, Toyota Motor Corp is 5.2 times less risky than Deltex Medical. It trades about 0.06 of its potential returns per unit of risk. Deltex Medical Group is currently generating about -0.12 per unit of risk. If you would invest  261,100  in Toyota Motor Corp on December 2, 2024 and sell it today you would earn a total of  17,300  from holding Toyota Motor Corp or generate 6.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.94%
Values	Daily Returns

Toyota Motor Corp  vs.  Deltex Medical Group

Toyota Motor Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Toyota Motor Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Toyota may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Deltex Medical Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deltex Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Toyota and Deltex Medical

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

The idea behind Toyota Motor Corp and Deltex Medical Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.