Correlation Between Volkswagen and Intel

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

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

Diversification Opportunities for Volkswagen and Intel

0.15

Correlation Coefficient

Volkswagen  Intel

Average diversification

The 3 months correlation between Volkswagen and Intel is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Volkswagen i.e., Volkswagen and Intel go up and down completely randomly.

Pair Corralation between Volkswagen and Intel

Assuming the 90 days trading horizon Volkswagen AG is expected to generate 0.51 times more return on investment than Intel. However, Volkswagen AG is 1.97 times less risky than Intel. It trades about 0.24 of its potential returns per unit of risk. Intel is currently generating about -0.02 per unit of risk. If you would invest  8,410  in Volkswagen AG on December 2, 2024 and sell it today you would earn a total of  2,370  from holding Volkswagen AG or generate 28.18% return on investment over 90 days.

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

Volkswagen AG  vs.  Intel

Volkswagen AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Volkswagen exhibited solid returns over the last few months and may actually be approaching a breakup point.

Intel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Intel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Volkswagen and Intel

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

The idea behind Volkswagen AG and Intel 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..