Correlation Between Volkswagen and Datalogic

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

By analyzing existing cross correlation between Volkswagen AG and Datalogic, you can compare the effects of market volatilities on Volkswagen and Datalogic 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 Volkswagen with a short position of Datalogic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Datalogic.

Diversification Opportunities for Volkswagen and Datalogic

0.81

Correlation Coefficient

Volkswagen  Datalogic

Very poor diversification

The 3 months correlation between Volkswagen and Datalogic is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Datalogic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datalogic and Volkswagen 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 Volkswagen AG are associated (or correlated) with Datalogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datalogic has no effect on the direction of Volkswagen i.e., Volkswagen and Datalogic go up and down completely randomly.

Pair Corralation between Volkswagen and Datalogic

Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the Datalogic. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 1.39 times less risky than Datalogic. The stock trades about -0.04 of its potential returns per unit of risk. The Datalogic is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  612.00  in Datalogic on October 9, 2024 and sell it today you would lose (108.00) from holding Datalogic or give up 17.65% of portfolio value over 90 days.

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

Volkswagen AG  vs.  Datalogic

Volkswagen AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Volkswagen is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Datalogic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Volkswagen and Datalogic

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

The idea behind Volkswagen AG and Datalogic 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.