Correlation Between HEALTHSTREAM (HL5SG) and Volkswagen
Can any of the company-specific risk be diversified away by investing in both HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG) and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEALTHSTREAM and Volkswagen AG, you can compare the effects of market volatilities on HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM (HL5SG) with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEALTHSTREAM (HL5SG) and Volkswagen.
Diversification Opportunities for HEALTHSTREAM (HL5SG) and Volkswagen
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HEALTHSTREAM and Volkswagen is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding HEALTHSTREAM and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and HEALTHSTREAM (HL5SG) 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 HEALTHSTREAM 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 HEALTHSTREAM (HL5SG) i.e., HEALTHSTREAM (HL5SG) and Volkswagen go up and down completely randomly.
Pair Corralation between HEALTHSTREAM (HL5SG) and Volkswagen
Assuming the 90 days trading horizon HEALTHSTREAM is expected to generate 0.88 times more return on investment than Volkswagen. However, HEALTHSTREAM is 1.13 times less risky than Volkswagen. It trades about 0.11 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.01 per unit of risk. If you would invest 2,900 in HEALTHSTREAM on October 7, 2024 and sell it today you would earn a total of 160.00 from holding HEALTHSTREAM or generate 5.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
HEALTHSTREAM vs. Volkswagen AG
Performance |
Timeline |
HEALTHSTREAM (HL5SG) |
Volkswagen AG |
HEALTHSTREAM (HL5SG) and Volkswagen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HEALTHSTREAM (HL5SG) and Volkswagen
The main advantage of trading using opposite HEALTHSTREAM (HL5SG) and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEALTHSTREAM (HL5SG) 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.HEALTHSTREAM (HL5SG) vs. Apple Inc | HEALTHSTREAM (HL5SG) vs. Apple Inc | HEALTHSTREAM (HL5SG) vs. Apple Inc | HEALTHSTREAM (HL5SG) vs. Apple Inc |
Volkswagen vs. Ribbon Communications | Volkswagen vs. TITAN MACHINERY | Volkswagen vs. Entravision Communications | Volkswagen vs. HUTCHISON TELECOMM |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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