Correlation Between Intermediate Capital and Toyota

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

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

Diversification Opportunities for Intermediate Capital and Toyota

-0.06

Correlation Coefficient

Intermediate Capital  Toyota

Good diversification

The 3 months correlation between Intermediate and Toyota is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Capital Group 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 Intermediate Capital 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 Intermediate Capital Group 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 Intermediate Capital i.e., Intermediate Capital and Toyota go up and down completely randomly.

Pair Corralation between Intermediate Capital and Toyota

Assuming the 90 days trading horizon Intermediate Capital Group is expected to generate 0.97 times more return on investment than Toyota. However, Intermediate Capital Group is 1.03 times less risky than Toyota. It trades about 0.23 of its potential returns per unit of risk. Toyota Motor Corp is currently generating about 0.01 per unit of risk. If you would invest  169,946  in Intermediate Capital Group on April 20, 2025 and sell it today you would earn a total of  45,654  from holding Intermediate Capital Group or generate 26.86% return on investment over 90 days.

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

Intermediate Capital Group  vs.  Toyota Motor Corp

Intermediate Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Intermediate Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Toyota Motor Corp

Risk-Adjusted Performance

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 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 Intermediate Capital and Toyota

The main advantage of trading using opposite Intermediate Capital and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Capital 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 Intermediate Capital Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.