Correlation Between Volkswagen and Gruppo MutuiOnline

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

By analyzing existing cross correlation between Volkswagen AG Non Vtg and Gruppo MutuiOnline SpA, you can compare the effects of market volatilities on Volkswagen and Gruppo MutuiOnline 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 Gruppo MutuiOnline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Gruppo MutuiOnline.

Diversification Opportunities for Volkswagen and Gruppo MutuiOnline

0.66

Correlation Coefficient

Volkswagen  Gruppo MutuiOnline

Poor diversification

The 3 months correlation between Volkswagen and Gruppo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Non Vtg and Gruppo MutuiOnline SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruppo MutuiOnline SpA 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 Non Vtg are associated (or correlated) with Gruppo MutuiOnline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruppo MutuiOnline SpA has no effect on the direction of Volkswagen i.e., Volkswagen and Gruppo MutuiOnline go up and down completely randomly.

Pair Corralation between Volkswagen and Gruppo MutuiOnline

Assuming the 90 days trading horizon Volkswagen AG Non Vtg is expected to under-perform the Gruppo MutuiOnline. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG Non Vtg is 15.68 times less risky than Gruppo MutuiOnline. The stock trades about -0.01 of its potential returns per unit of risk. The Gruppo MutuiOnline SpA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,026  in Gruppo MutuiOnline SpA on October 24, 2024 and sell it today you would earn a total of  519.00  from holding Gruppo MutuiOnline SpA or generate 17.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	65.86%
Values	Daily Returns

Volkswagen AG Non Vtg  vs.  Gruppo MutuiOnline SpA

Volkswagen AG Non

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG Non Vtg are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Volkswagen is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Gruppo MutuiOnline SpA

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Gruppo MutuiOnline SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Gruppo MutuiOnline unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Volkswagen and Gruppo MutuiOnline

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

The idea behind Volkswagen AG Non Vtg and Gruppo MutuiOnline SpA 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.