Correlation Between ALLIANZ TECHNOTRLS-025 and Volkswagen

Can any of the company-specific risk be diversified away by investing in both ALLIANZ TECHNOTRLS-025 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 ALLIANZ TECHNOTRLS-025 and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALLIANZ TECHNOTRLS 025 and Volkswagen AG, you can compare the effects of market volatilities on ALLIANZ TECHNOTRLS-025 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 ALLIANZ TECHNOTRLS-025 with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALLIANZ TECHNOTRLS-025 and Volkswagen.

Diversification Opportunities for ALLIANZ TECHNOTRLS-025 and Volkswagen

-0.53

Correlation Coefficient

ALLIANZ TECHNOTRLS-025  Volkswagen

Excellent diversification

The 3 months correlation between ALLIANZ and Volkswagen is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding ALLIANZ TECHNOTRLS 025 and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and ALLIANZ TECHNOTRLS-025 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 ALLIANZ TECHNOTRLS 025 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 has no effect on the direction of ALLIANZ TECHNOTRLS-025 i.e., ALLIANZ TECHNOTRLS-025 and Volkswagen go up and down completely randomly.

Pair Corralation between ALLIANZ TECHNOTRLS-025 and Volkswagen

Assuming the 90 days horizon ALLIANZ TECHNOTRLS 025 is expected to under-perform the Volkswagen. In addition to that, ALLIANZ TECHNOTRLS-025 is 1.19 times more volatile than Volkswagen AG. It trades about -0.07 of its total potential returns per unit of risk. Volkswagen AG is currently generating about 0.13 per unit of volatility. If you would invest  9,150  in Volkswagen AG on December 24, 2024 and sell it today you would earn a total of  1,320  from holding Volkswagen AG or generate 14.43% return on investment over 90 days.

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

ALLIANZ TECHNOTRLS 025  vs.  Volkswagen AG

ALLIANZ TECHNOTRLS 025

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALLIANZ TECHNOTRLS 025 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Volkswagen AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Volkswagen exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALLIANZ TECHNOTRLS-025 and Volkswagen

The main advantage of trading using opposite ALLIANZ TECHNOTRLS-025 and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALLIANZ TECHNOTRLS-025 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 ALLIANZ TECHNOTRLS 025 and Volkswagen AG 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.