Correlation Between Volkswagen and Jaws Hurricane

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

Diversification Opportunities for Volkswagen and Jaws Hurricane

-0.91

Correlation Coefficient

Volkswagen  Jaws Hurricane

Pay attention - limited upside

The 3 months correlation between Volkswagen and Jaws is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Pref and Jaws Hurricane Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaws Hurricane Acqui 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 Jaws Hurricane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaws Hurricane Acqui has no effect on the direction of Volkswagen i.e., Volkswagen and Jaws Hurricane go up and down completely randomly.

Pair Corralation between Volkswagen and Jaws Hurricane

Assuming the 90 days horizon Volkswagen AG Pref is expected to under-perform the Jaws Hurricane. In addition to that, Volkswagen is 15.72 times more volatile than Jaws Hurricane Acquisition. It trades about -0.01 of its total potential returns per unit of risk. Jaws Hurricane Acquisition is currently generating about 0.23 per unit of volatility. If you would invest  996.00  in Jaws Hurricane Acquisition on September 18, 2024 and sell it today you would earn a total of  28.00  from holding Jaws Hurricane Acquisition or generate 2.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	24.04%
Values	Daily Returns

Volkswagen AG Pref  vs.  Jaws Hurricane Acquisition

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.

Jaws Hurricane Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaws Hurricane Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Jaws Hurricane is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Volkswagen and Jaws Hurricane

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

The idea behind Volkswagen AG Pref and Jaws Hurricane Acquisition 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.