Correlation Between Volkswagen and Julius Bär

Can any of the company-specific risk be diversified away by investing in both Volkswagen and Julius Bär 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 Julius Bär 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 Julius Br Gruppe, you can compare the effects of market volatilities on Volkswagen and Julius Bär 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 Julius Bär. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Julius Bär.

Diversification Opportunities for Volkswagen and Julius Bär

-0.41

Correlation Coefficient

Volkswagen  Julius Bär

Very good diversification

The 3 months correlation between Volkswagen and Julius is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG VZO and Julius Br Gruppe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Julius Br Gruppe 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 Julius Bär. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Julius Br Gruppe has no effect on the direction of Volkswagen i.e., Volkswagen and Julius Bär go up and down completely randomly.

Pair Corralation between Volkswagen and Julius Bär

Assuming the 90 days horizon Volkswagen AG VZO is expected to under-perform the Julius Bär. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG VZO is 1.07 times less risky than Julius Bär. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Julius Br Gruppe is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,826  in Julius Br Gruppe on September 2, 2024 and sell it today you would earn a total of  846.00  from holding Julius Br Gruppe or generate 14.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Volkswagen AG VZO  vs.  Julius Br Gruppe

Volkswagen AG VZO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG VZO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Julius Br Gruppe

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Julius Br Gruppe are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Julius Bär reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Volkswagen and Julius Bär

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

The idea behind Volkswagen AG VZO and Julius Br Gruppe 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.