Toyota Motors’ stock (NYSE: TM) has risen by 1.5% over the last five trading days. In comparison, the broader S&P500 has risen by 0.9% over the last five trading days. The company is expected to release its FY 2021 (ended March 2021) results in the coming weeks which are expected to be affected by the coronavirus pandemic across the world. But will the company resume its upward trajectory over the coming weeks, or is a fall in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price using 20 years of historical stock data, returns for Toyota’s stock average around 0.7% in the next one-month (twenty-one trading days) period after experiencing a 1.5% rise in a week (five trading days). Further, the stock is likely to underperform S&P500 returns by 0.4% over the next month (twenty-one trading days).
But how would these numbers change if you are interested in holding Toyota’s stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Toyota Motors’ stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!
MACHINE LEARNING ENGINE – try it yourself:
IF TM stock moved by -5% over five trading days, THEN over the next twenty-one trading days, TM stock moves an average of 2.4%, which implies an excess return of -0.3% compared to the S&P500.
More importantly, there is a 71.6% probability of a positive return over the next twenty-one trading days and a 60.2% probability of a positive excess return after a -5% change over five trading days.
Some Fun Scenarios, FAQs & Making Sense of Toyota Motors Stock Movements
Question 1: Is the average return for Toyota Motors stock higher after a drop?
Answer:
Case 1: Toyota Motors stock drops by -5% or more in a week
Case 2: Toyota Motors stock rises by 5% or more in a week
Is the average return for Toyota Motors stock higher over the subsequent month after Case 1 or Case 2?
TM stock fares better after Case 1, with an average return of 2.4% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 0.8% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Toyota Motors stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer:
If you buy and hold Toyota Motors stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For TM stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for Toyota Motors after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
Answer:
The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
TM’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Toyota Motors stock by changing the inputs in the charts above.
While Toyota stock may have moved, electric vehicles are the future of transportation, but picking the right EV stocks can be tricky. Investing in Electric Vehicle Component Supplier Stocks can be a good alternative to play the growth in the EV market..
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
