Correlation Between Volkswagen and Deutsche Post
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Deutsche Post 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 Deutsche Post into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Deutsche Post AG, you can compare the effects of market volatilities on Volkswagen and Deutsche Post 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 Deutsche Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Deutsche Post.
Diversification Opportunities for Volkswagen and Deutsche Post
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Volkswagen and Deutsche is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Deutsche Post AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Post AG 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 Deutsche Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Post AG has no effect on the direction of Volkswagen i.e., Volkswagen and Deutsche Post go up and down completely randomly.
Pair Corralation between Volkswagen and Deutsche Post
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the Deutsche Post. In addition to that, Volkswagen is 1.17 times more volatile than Deutsche Post AG. It trades about -0.07 of its total potential returns per unit of risk. Deutsche Post AG is currently generating about -0.02 per unit of volatility. If you would invest 3,990 in Deutsche Post AG on August 30, 2024 and sell it today you would lose (543.00) from holding Deutsche Post AG or give up 13.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. Deutsche Post AG
Performance |
| Timeline |
| Volkswagen AG |
| Deutsche Post AG |
Volkswagen and Deutsche Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Deutsche Post
The main advantage of trading using opposite Volkswagen and Deutsche Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Deutsche Post 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 Deutsche Post will offset losses from the drop in Deutsche Post's long position.| Volkswagen vs. Amedeo Air Four | Volkswagen vs. Associated British Foods | Volkswagen vs. Alaska Air Group | Volkswagen vs. Delta Air Lines |
| Deutsche Post vs. Lendinvest PLC | Deutsche Post vs. Neometals | Deutsche Post vs. Albion Technology General | Deutsche Post vs. Jupiter Fund Management |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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