Correlation Between Volkswagen and Amundi Label

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

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

Diversification Opportunities for Volkswagen and Amundi Label

0.69

Correlation Coefficient

Volkswagen  Amundi Label

Poor diversification

The 3 months correlation between Volkswagen and Amundi is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Amundi Label Actions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Label Actions 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 Amundi Label. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Label Actions has no effect on the direction of Volkswagen i.e., Volkswagen and Amundi Label go up and down completely randomly.

Pair Corralation between Volkswagen and Amundi Label

Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the Amundi Label. In addition to that, Volkswagen is 1.97 times more volatile than Amundi Label Actions. It trades about -0.09 of its total potential returns per unit of risk. Amundi Label Actions is currently generating about -0.01 per unit of volatility. If you would invest  30,215  in Amundi Label Actions on September 29, 2024 and sell it today you would lose (326.00) from holding Amundi Label Actions or give up 1.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Volkswagen AG  vs.  Amundi Label Actions

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. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Amundi Label Actions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amundi Label Actions has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Amundi Label is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Volkswagen and Amundi Label

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

The idea behind Volkswagen AG and Amundi Label Actions 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.