Correlation Between Volkswagen and Esfera Robotics

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

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

Diversification Opportunities for Volkswagen and Esfera Robotics

-0.84

Correlation Coefficient

Volkswagen  Esfera Robotics

Pay attention - limited upside

The 3 months correlation between Volkswagen and Esfera is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Esfera Robotics R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esfera Robotics R 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 Esfera Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esfera Robotics R has no effect on the direction of Volkswagen i.e., Volkswagen and Esfera Robotics go up and down completely randomly.

Pair Corralation between Volkswagen and Esfera Robotics

Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the Esfera Robotics. In addition to that, Volkswagen is 1.3 times more volatile than Esfera Robotics R. It trades about -0.07 of its total potential returns per unit of risk. Esfera Robotics R is currently generating about 0.2 per unit of volatility. If you would invest  30,966  in Esfera Robotics R on October 1, 2024 and sell it today you would earn a total of  4,602  from holding Esfera Robotics R or generate 14.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Volkswagen AG  vs.  Esfera Robotics R

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 fragile 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.

Esfera Robotics R

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Esfera Robotics R are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat fragile basic indicators, Esfera Robotics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Volkswagen and Esfera Robotics

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

The idea behind Volkswagen AG and Esfera Robotics R 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 Stocks Directory module to find actively traded stocks across global markets.