Correlation Between Volkswagen and EV Technology

Can any of the company-specific risk be diversified away by investing in both Volkswagen and EV Technology 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 EV Technology 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 EV Technology Group, you can compare the effects of market volatilities on Volkswagen and EV Technology 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 EV Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and EV Technology.

Diversification Opportunities for Volkswagen and EV Technology

0.0

Correlation Coefficient

Volkswagen  EV Technology

Pay attention - limited upside

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

Pair Corralation between Volkswagen and EV Technology

If you would invest  917.00  in Volkswagen AG Pref on December 30, 2024 and sell it today you would earn a total of  126.00  from holding Volkswagen AG Pref or generate 13.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Volkswagen AG Pref  vs.  EV Technology Group

Volkswagen AG Pref

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG Pref are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Volkswagen showed solid returns over the last few months and may actually be approaching a breakup point.

EV Technology Group

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Volkswagen and EV Technology

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

The idea behind Volkswagen AG Pref and EV Technology Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.