Correlation Between VOLKSWAGEN and Stryker

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

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

Diversification Opportunities for VOLKSWAGEN and Stryker

-0.9

Correlation Coefficient

VOLKSWAGEN  Stryker

Pay attention - limited upside

The 3 months correlation between VOLKSWAGEN and Stryker is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding VOLKSWAGEN AG VZ and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker 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 VZ are associated (or correlated) with Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of VOLKSWAGEN i.e., VOLKSWAGEN and Stryker go up and down completely randomly.

Pair Corralation between VOLKSWAGEN and Stryker

Assuming the 90 days trading horizon VOLKSWAGEN AG VZ is expected to under-perform the Stryker. In addition to that, VOLKSWAGEN is 1.36 times more volatile than Stryker. It trades about -0.02 of its total potential returns per unit of risk. Stryker is currently generating about 0.07 per unit of volatility. If you would invest  24,279  in Stryker on October 5, 2024 and sell it today you would earn a total of  10,611  from holding Stryker or generate 43.7% return on investment over 90 days.

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

VOLKSWAGEN AG VZ  vs.  Stryker

VOLKSWAGEN AG VZ

Risk-Adjusted Performance

0 of 100

Very Weak

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

Stryker

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Stryker has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, Stryker may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with VOLKSWAGEN and Stryker

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

The idea behind VOLKSWAGEN AG VZ and Stryker 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.