Correlation Between Volkswagen and Electric Last

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

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

Diversification Opportunities for Volkswagen and Electric Last

0.0

Correlation Coefficient

Volkswagen  Electric Last

Pay attention - limited upside

The 3 months correlation between Volkswagen and Electric is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Electric Last Mile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electric Last Mile and Volkswagen 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 Volkswagen AG are associated (or correlated) with Electric Last. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electric Last Mile has no effect on the direction of Volkswagen i.e., Volkswagen and Electric Last go up and down completely randomly.

Pair Corralation between Volkswagen and Electric Last

If you would invest (100.00) in Electric Last Mile on September 3, 2024 and sell it today you would earn a total of  100.00  from holding Electric Last Mile or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Volkswagen AG  vs.  Electric Last Mile

Volkswagen AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Electric Last Mile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electric Last Mile has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Electric Last is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Volkswagen and Electric Last

The main advantage of trading using opposite Volkswagen and Electric Last positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Electric Last 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 Electric Last will offset losses from the drop in Electric Last's long position.

The idea behind Volkswagen AG and Electric Last Mile 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..