Correlation Between Live Motion and Volkswagen

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

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

Diversification Opportunities for Live Motion and Volkswagen

0.13

Correlation Coefficient

Live Motion  Volkswagen

Average diversification

The 3 months correlation between Live and Volkswagen is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Live Motion Games 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 Live Motion 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 Live Motion Games 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 Live Motion i.e., Live Motion and Volkswagen go up and down completely randomly.

Pair Corralation between Live Motion and Volkswagen

Assuming the 90 days trading horizon Live Motion Games is expected to generate 3.34 times more return on investment than Volkswagen. However, Live Motion is 3.34 times more volatile than Volkswagen AG Non Vtg. It trades about 0.07 of its potential returns per unit of risk. Volkswagen AG Non Vtg is currently generating about 0.14 per unit of risk. If you would invest  89.00  in Live Motion Games on December 24, 2024 and sell it today you would earn a total of  13.00  from holding Live Motion Games or generate 14.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

Live Motion Games  vs.  Volkswagen AG Non Vtg

Live Motion Games

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Live Motion Games are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Live Motion reported solid returns over the last few months and may actually be approaching a breakup point.

Volkswagen AG Non

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG Non Vtg are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Volkswagen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Live Motion and Volkswagen

The main advantage of trading using opposite Live Motion and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Motion 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 Live Motion Games 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.