Correlation Between Volkswagen and Benchmark Bankshares
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Benchmark Bankshares 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 Benchmark Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG VZO and Benchmark Bankshares, you can compare the effects of market volatilities on Volkswagen and Benchmark Bankshares 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 Benchmark Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Benchmark Bankshares.
Diversification Opportunities for Volkswagen and Benchmark Bankshares
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and Benchmark is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG VZO and Benchmark Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Bankshares 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 VZO are associated (or correlated) with Benchmark Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Bankshares has no effect on the direction of Volkswagen i.e., Volkswagen and Benchmark Bankshares go up and down completely randomly.
Pair Corralation between Volkswagen and Benchmark Bankshares
Assuming the 90 days horizon Volkswagen is expected to generate 1.58 times less return on investment than Benchmark Bankshares. In addition to that, Volkswagen is 1.03 times more volatile than Benchmark Bankshares. It trades about 0.14 of its total potential returns per unit of risk. Benchmark Bankshares is currently generating about 0.23 per unit of volatility. If you would invest 2,379 in Benchmark Bankshares on September 26, 2024 and sell it today you would earn a total of 221.00 from holding Benchmark Bankshares or generate 9.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Volkswagen AG VZO vs. Benchmark Bankshares
Performance |
Timeline |
Volkswagen AG VZO |
Benchmark Bankshares |
Volkswagen and Benchmark Bankshares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Volkswagen and Benchmark Bankshares
The main advantage of trading using opposite Volkswagen and Benchmark Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Benchmark Bankshares 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 Benchmark Bankshares will offset losses from the drop in Benchmark Bankshares' long position.Volkswagen vs. Volkswagen AG Pref | Volkswagen vs. Mercedes Benz Group AG | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Honda Motor Co |
Benchmark Bankshares vs. Citizens Financial Corp | Benchmark Bankshares vs. Farmers Bancorp | Benchmark Bankshares vs. Alpine Banks of | Benchmark Bankshares vs. Taylor Calvin B |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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