Correlation Between Volkswagen and PureTech Health
Can any of the company-specific risk be diversified away by investing in both Volkswagen and PureTech Health 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 PureTech Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and PureTech Health plc, you can compare the effects of market volatilities on Volkswagen and PureTech Health 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 PureTech Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and PureTech Health.
Diversification Opportunities for Volkswagen and PureTech Health
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and PureTech is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health plc 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 PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of Volkswagen i.e., Volkswagen and PureTech Health go up and down completely randomly.
Pair Corralation between Volkswagen and PureTech Health
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the PureTech Health. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 1.62 times less risky than PureTech Health. The stock trades about -0.09 of its potential returns per unit of risk. The PureTech Health plc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 23,850 in PureTech Health plc on September 4, 2024 and sell it today you would lose (7,110) from holding PureTech Health plc or give up 29.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. PureTech Health plc
Performance |
| Timeline |
| Volkswagen AG |
| PureTech Health plc |
Volkswagen and PureTech Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and PureTech Health
The main advantage of trading using opposite Volkswagen and PureTech Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, PureTech Health 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 PureTech Health will offset losses from the drop in PureTech Health's long position.| Volkswagen vs. Kaufman Et Broad | Volkswagen vs. Auto Trader Group | Volkswagen vs. Indutrade AB | Volkswagen vs. National Beverage Corp |
| PureTech Health vs. SupplyMe Capital PLC | PureTech Health vs. SM Energy Co | PureTech Health vs. FuelCell Energy | PureTech Health vs. Grand Vision Media |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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