Correlation Between Toyota and Pets At

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

Diversification Opportunities for Toyota and Pets At

0.08

Correlation Coefficient

Toyota  Pets At

Significant diversification

The 3 months correlation between Toyota and Pets is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Toyota Motor Corp and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home 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 Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of Toyota i.e., Toyota and Pets At go up and down completely randomly.

Pair Corralation between Toyota and Pets At

Assuming the 90 days trading horizon Toyota Motor Corp is expected to under-perform the Pets At. In addition to that, Toyota is 1.22 times more volatile than Pets at Home. It trades about -0.05 of its total potential returns per unit of risk. Pets at Home is currently generating about 0.08 per unit of volatility. If you would invest  20,343  in Pets at Home on April 18, 2025 and sell it today you would earn a total of  3,657  from holding Pets at Home or generate 17.98% 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.  Pets at Home

Toyota Motor Corp

Risk-Adjusted Performance

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.

Pets at Home

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pets at Home are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Pets At may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Toyota and Pets At

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

The idea behind Toyota Motor Corp and Pets at Home 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.