Correlation Between Volkswagen and LEROY SEAFOOD

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

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

Diversification Opportunities for Volkswagen and LEROY SEAFOOD

-0.29

Correlation Coefficient

Volkswagen  LEROY SEAFOOD

Very good diversification

The 3 months correlation between Volkswagen and LEROY is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and LEROY SEAFOOD GRUNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEROY SEAFOOD GRUNSPADR 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 LEROY SEAFOOD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEROY SEAFOOD GRUNSPADR has no effect on the direction of Volkswagen i.e., Volkswagen and LEROY SEAFOOD go up and down completely randomly.

Pair Corralation between Volkswagen and LEROY SEAFOOD

Assuming the 90 days trading horizon Volkswagen AG is expected to generate 0.9 times more return on investment than LEROY SEAFOOD. However, Volkswagen AG is 1.11 times less risky than LEROY SEAFOOD. It trades about 0.2 of its potential returns per unit of risk. LEROY SEAFOOD GRUNSPADR is currently generating about -0.18 per unit of risk. If you would invest  8,515  in Volkswagen AG on October 5, 2024 and sell it today you would earn a total of  460.00  from holding Volkswagen AG or generate 5.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Volkswagen AG  vs.  LEROY SEAFOOD GRUNSPADR

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.

LEROY SEAFOOD GRUNSPADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LEROY SEAFOOD GRUNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, LEROY SEAFOOD is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Volkswagen and LEROY SEAFOOD

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

The idea behind Volkswagen AG and LEROY SEAFOOD GRUNSPADR 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.