Correlation Between Volkswagen and AcadeMedia
Can any of the company-specific risk be diversified away by investing in both Volkswagen and AcadeMedia 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 AcadeMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and AcadeMedia AB, you can compare the effects of market volatilities on Volkswagen and AcadeMedia 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 AcadeMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and AcadeMedia.
Diversification Opportunities for Volkswagen and AcadeMedia
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Volkswagen and AcadeMedia is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and AcadeMedia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AcadeMedia AB 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 AcadeMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AcadeMedia AB has no effect on the direction of Volkswagen i.e., Volkswagen and AcadeMedia go up and down completely randomly.
Pair Corralation between Volkswagen and AcadeMedia
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the AcadeMedia. In addition to that, Volkswagen is 1.12 times more volatile than AcadeMedia AB. It trades about -0.07 of its total potential returns per unit of risk. AcadeMedia AB is currently generating about 0.13 per unit of volatility. If you would invest 5,270 in AcadeMedia AB on October 13, 2024 and sell it today you would earn a total of 1,560 from holding AcadeMedia AB or generate 29.6% 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. AcadeMedia AB
Performance |
| Timeline |
| Volkswagen AG |
| AcadeMedia AB |
Volkswagen and AcadeMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and AcadeMedia
The main advantage of trading using opposite Volkswagen and AcadeMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, AcadeMedia 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 AcadeMedia will offset losses from the drop in AcadeMedia's long position.| Volkswagen vs. Atalaya Mining | Volkswagen vs. Seraphim Space Investment | Volkswagen vs. Thor Mining PLC | Volkswagen vs. Nordic Semiconductor ASA |
| AcadeMedia vs. Walmart | AcadeMedia vs. BYD Co | AcadeMedia vs. Volkswagen AG | AcadeMedia vs. Volkswagen AG Non Vtg |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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