Correlation Between Volkswagen and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both Volkswagen and BE Semiconductor 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 BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and BE Semiconductor Industries, you can compare the effects of market volatilities on Volkswagen and BE Semiconductor 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 BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and BE Semiconductor.
Diversification Opportunities for Volkswagen and BE Semiconductor
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Volkswagen and 0XVE is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind 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 BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of Volkswagen i.e., Volkswagen and BE Semiconductor go up and down completely randomly.
Pair Corralation between Volkswagen and BE Semiconductor
Assuming the 90 days trading horizon Volkswagen AG is expected to generate 0.4 times more return on investment than BE Semiconductor. However, Volkswagen AG is 2.51 times less risky than BE Semiconductor. It trades about 0.45 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about -0.13 per unit of risk. If you would invest 8,910 in Volkswagen AG on November 2, 2024 and sell it today you would earn a total of 1,170 from holding Volkswagen AG or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Volkswagen AG vs. BE Semiconductor Industries
Performance |
| Timeline |
| Volkswagen AG |
| BE Semiconductor Ind |
Volkswagen and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and BE Semiconductor
The main advantage of trading using opposite Volkswagen and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, BE Semiconductor 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.| Volkswagen vs. PureTech Health plc | Volkswagen vs. MyHealthChecked Plc | Volkswagen vs. HCA Healthcare | Volkswagen vs. Gamma Communications PLC |
| BE Semiconductor vs. Hilton Food Group | BE Semiconductor vs. Edita Food Industries | BE Semiconductor vs. Batm Advanced Communications | BE Semiconductor vs. Verizon Communications |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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