Correlation Between Volkswagen and UR ENERGY

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

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

Diversification Opportunities for Volkswagen and UR ENERGY

-0.89

Correlation Coefficient

Volkswagen  UR ENERGY

Pay attention - limited upside

The 3 months correlation between Volkswagen and U9T is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and UR ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UR ENERGY 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 UR ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UR ENERGY has no effect on the direction of Volkswagen i.e., Volkswagen and UR ENERGY go up and down completely randomly.

Pair Corralation between Volkswagen and UR ENERGY

Assuming the 90 days trading horizon Volkswagen AG is expected to generate 0.35 times more return on investment than UR ENERGY. However, Volkswagen AG is 2.82 times less risky than UR ENERGY. It trades about 0.17 of its potential returns per unit of risk. UR ENERGY is currently generating about -0.08 per unit of risk. If you would invest  8,704  in Volkswagen AG on December 23, 2024 and sell it today you would earn a total of  1,466  from holding Volkswagen AG or generate 16.84% return on investment over 90 days.

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

Volkswagen AG  vs.  UR ENERGY

Volkswagen AG

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Volkswagen reported solid returns over the last few months and may actually be approaching a breakup point.

UR ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days UR ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Volkswagen and UR ENERGY

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

The idea behind Volkswagen AG and UR ENERGY 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..