Correlation Between PotlatchDeltic and Volkswagen

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

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

Diversification Opportunities for PotlatchDeltic and Volkswagen

-0.57

Correlation Coefficient

PotlatchDeltic  Volkswagen

Excellent diversification

The 3 months correlation between PotlatchDeltic and Volkswagen is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding PotlatchDeltic and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and PotlatchDeltic 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 PotlatchDeltic 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 PotlatchDeltic i.e., PotlatchDeltic and Volkswagen go up and down completely randomly.

Pair Corralation between PotlatchDeltic and Volkswagen

Assuming the 90 days horizon PotlatchDeltic is expected to generate 1.4 times more return on investment than Volkswagen. However, PotlatchDeltic is 1.4 times more volatile than Volkswagen AG. It trades about 0.32 of its potential returns per unit of risk. Volkswagen AG is currently generating about 0.32 per unit of risk. If you would invest  3,740  in PotlatchDeltic on October 23, 2024 and sell it today you would earn a total of  340.00  from holding PotlatchDeltic or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

PotlatchDeltic  vs.  Volkswagen AG

PotlatchDeltic

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PotlatchDeltic are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PotlatchDeltic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Volkswagen AG

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Volkswagen is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PotlatchDeltic and Volkswagen

The main advantage of trading using opposite PotlatchDeltic and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PotlatchDeltic 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 PotlatchDeltic 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.