Correlation Between Volkswagen and Various Eateries

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

Diversification Opportunities for Volkswagen and Various Eateries

-0.49

Correlation Coefficient

Volkswagen  Various Eateries

Very good diversification

The 3 months correlation between Volkswagen and Various is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Non Vtg and Various Eateries PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Various Eateries PLC 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 Various Eateries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Various Eateries PLC has no effect on the direction of Volkswagen i.e., Volkswagen and Various Eateries go up and down completely randomly.

Pair Corralation between Volkswagen and Various Eateries

Assuming the 90 days trading horizon Volkswagen AG Non Vtg is expected to generate 0.98 times more return on investment than Various Eateries. However, Volkswagen AG Non Vtg is 1.02 times less risky than Various Eateries. It trades about 0.38 of its potential returns per unit of risk. Various Eateries PLC is currently generating about -0.43 per unit of risk. If you would invest  8,641  in Volkswagen AG Non Vtg on October 22, 2024 and sell it today you would earn a total of  692.00  from holding Volkswagen AG Non Vtg or generate 8.01% return on investment over 90 days.

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

Volkswagen AG Non Vtg  vs.  Various Eateries PLC

Volkswagen AG Non

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG Non Vtg are ranked lower than 2 (%) 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.

Various Eateries PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Various Eateries PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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 Various Eateries

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

The idea behind Volkswagen AG Non Vtg and Various Eateries PLC 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.