Correlation Between EV Technology and Volkswagen

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

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

Diversification Opportunities for EV Technology and Volkswagen

0.0

Correlation Coefficient

EV Technology  Volkswagen

Pay attention - limited upside

The 3 months correlation between EVTGF and Volkswagen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EV Technology Group and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and EV Technology 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 EV Technology Group 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 EV Technology i.e., EV Technology and Volkswagen go up and down completely randomly.

Pair Corralation between EV Technology and Volkswagen

If you would invest  9,450  in Volkswagen AG on December 30, 2024 and sell it today you would earn a total of  1,583  from holding Volkswagen AG or generate 16.75% return on investment over 90 days.

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

EV Technology Group  vs.  Volkswagen AG

EV Technology Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days EV Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, EV Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the 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 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Volkswagen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EV Technology and Volkswagen

The main advantage of trading using opposite EV Technology and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EV Technology 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 EV Technology Group 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.