Correlation Between Volkswagen and Diego Pellicer

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

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

Diversification Opportunities for Volkswagen and Diego Pellicer

0.68

Correlation Coefficient

Volkswagen  Diego Pellicer

Poor diversification

The 3 months correlation between Volkswagen and Diego is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Pref and Diego Pellicer Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diego Pellicer Worldwide 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 Pref are associated (or correlated) with Diego Pellicer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diego Pellicer Worldwide has no effect on the direction of Volkswagen i.e., Volkswagen and Diego Pellicer go up and down completely randomly.

Pair Corralation between Volkswagen and Diego Pellicer

Assuming the 90 days horizon Volkswagen AG Pref is expected to under-perform the Diego Pellicer. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG Pref is 111.18 times less risky than Diego Pellicer. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Diego Pellicer Worldwide is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.40  in Diego Pellicer Worldwide on September 24, 2024 and sell it today you would lose (0.39) from holding Diego Pellicer Worldwide or give up 97.5% of portfolio value over 90 days.

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

Volkswagen AG Pref  vs.  Diego Pellicer Worldwide

Volkswagen AG Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG Pref has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Diego Pellicer Worldwide

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Diego Pellicer Worldwide are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Diego Pellicer showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Volkswagen and Diego Pellicer

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

The idea behind Volkswagen AG Pref and Diego Pellicer Worldwide 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.