Correlation Between Volkswagen and Ion Beam
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Ion Beam 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 Ion Beam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Ion Beam Applications, you can compare the effects of market volatilities on Volkswagen and Ion Beam 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 Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Ion Beam.
Diversification Opportunities for Volkswagen and Ion Beam
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Volkswagen and Ion is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications 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 Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of Volkswagen i.e., Volkswagen and Ion Beam go up and down completely randomly.
Pair Corralation between Volkswagen and Ion Beam
Assuming the 90 days trading horizon Volkswagen AG is expected to generate 1.33 times more return on investment than Ion Beam. However, Volkswagen is 1.33 times more volatile than Ion Beam Applications. It trades about 0.13 of its potential returns per unit of risk. Ion Beam Applications is currently generating about -0.09 per unit of risk. If you would invest 8,785 in Volkswagen AG on October 11, 2024 and sell it today you would earn a total of 320.00 from holding Volkswagen AG or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. Ion Beam Applications
Performance |
| Timeline |
| Volkswagen AG |
| Ion Beam Applications |
Volkswagen and Ion Beam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Ion Beam
The main advantage of trading using opposite Volkswagen and Ion Beam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Ion Beam 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 Ion Beam will offset losses from the drop in Ion Beam's long position.| Volkswagen vs. Livermore Investments Group | Volkswagen vs. Travel Leisure Co | Volkswagen vs. Herald Investment Trust | Volkswagen vs. Coeur Mining |
| Ion Beam vs. Zurich Insurance Group | Ion Beam vs. CNH Industrial NV | Ion Beam vs. Jupiter Fund Management | Ion Beam vs. Air Products Chemicals |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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