Correlation Between Volkswagen and NIKKON HOLDINGS

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

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

Diversification Opportunities for Volkswagen and NIKKON HOLDINGS

0.0

Correlation Coefficient

Volkswagen  NIKKON HOLDINGS

Pay attention - limited upside

The 3 months correlation between Volkswagen and NIKKON is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and NIKKON HOLDINGS TD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKKON HOLDINGS TD 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 NIKKON HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIKKON HOLDINGS TD has no effect on the direction of Volkswagen i.e., Volkswagen and NIKKON HOLDINGS go up and down completely randomly.

Pair Corralation between Volkswagen and NIKKON HOLDINGS

If you would invest  8,704  in Volkswagen AG on December 22, 2024 and sell it today you would earn a total of  2,026  from holding Volkswagen AG or generate 23.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Volkswagen AG  vs.  NIKKON HOLDINGS TD

Volkswagen AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Volkswagen reported solid returns over the last few months and may actually be approaching a breakup point.

NIKKON HOLDINGS TD

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Volkswagen and NIKKON HOLDINGS

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

The idea behind Volkswagen AG and NIKKON HOLDINGS TD 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.