Correlation Between Infrastrutture Wireless and Volkswagen

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

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

Diversification Opportunities for Infrastrutture Wireless and Volkswagen

-0.07

Correlation Coefficient

Infrastrutture Wireless  Volkswagen

Good diversification

The 3 months correlation between Infrastrutture and Volkswagen is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Infrastrutture Wireless Italia and Volkswagen AG Non Vtg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG Non and Infrastrutture Wireless 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 Infrastrutture Wireless Italiane are associated (or correlated) with Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG Non has no effect on the direction of Infrastrutture Wireless i.e., Infrastrutture Wireless and Volkswagen go up and down completely randomly.

Pair Corralation between Infrastrutture Wireless and Volkswagen

Assuming the 90 days trading horizon Infrastrutture Wireless Italiane is not expected to generate positive returns. However, Infrastrutture Wireless Italiane is 1.53 times less risky than Volkswagen. It waists most of its returns potential to compensate for thr risk taken. Volkswagen is generating about 0.25 per unit of risk. If you would invest  8,177  in Volkswagen AG Non Vtg on December 4, 2024 and sell it today you would earn a total of  2,463  from holding Volkswagen AG Non Vtg or generate 30.12% return on investment over 90 days.

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

Infrastrutture Wireless Italia  vs.  Volkswagen AG Non Vtg

Infrastrutture Wireless

Risk-Adjusted Performance

Very Weak

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

Volkswagen AG Non

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG Non Vtg are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Volkswagen unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infrastrutture Wireless and Volkswagen

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

The idea behind Infrastrutture Wireless Italiane and Volkswagen AG Non Vtg 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.