Correlation Between Volkswagen and New Residential
Can any of the company-specific risk be diversified away by investing in both Volkswagen and New Residential 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 New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and New Residential Investment, you can compare the effects of market volatilities on Volkswagen and New Residential 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 New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and New Residential.
Diversification Opportunities for Volkswagen and New Residential
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Volkswagen and New is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Volkswagen i.e., Volkswagen and New Residential go up and down completely randomly.
Pair Corralation between Volkswagen and New Residential
Assuming the 90 days trading horizon Volkswagen AG is expected to generate 0.91 times more return on investment than New Residential. However, Volkswagen AG is 1.1 times less risky than New Residential. It trades about 0.13 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.0 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 Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Volkswagen AG vs. New Residential Investment
Performance |
| Timeline |
| Volkswagen AG |
| New Residential Inve |
Volkswagen and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and New Residential
The main advantage of trading using opposite Volkswagen and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Volkswagen vs. Livermore Investments Group | Volkswagen vs. Travel Leisure Co | Volkswagen vs. Herald Investment Trust | Volkswagen vs. Coeur Mining |
| New Residential vs. Zoom Video Communications | New Residential vs. Travel Leisure Co | New Residential vs. Aeorema Communications Plc | New Residential vs. Kaufman Et Broad |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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