Correlation Between Volkswagen and Ion Beam
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Ion Beam 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 Ion Beam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG Non Vtg and Ion Beam Applications, you can compare the effects of market volatilities on Volkswagen and Ion Beam 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 Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Ion Beam.
Diversification Opportunities for Volkswagen and Ion Beam
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Volkswagen and Ion is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Non Vtg and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications 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 Non Vtg are associated (or correlated) with Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of Volkswagen i.e., Volkswagen and Ion Beam go up and down completely randomly.
Pair Corralation between Volkswagen and Ion Beam
Assuming the 90 days trading horizon Volkswagen AG Non Vtg is expected to generate 0.79 times more return on investment than Ion Beam. However, Volkswagen AG Non Vtg is 1.26 times less risky than Ion Beam. It trades about 0.1 of its potential returns per unit of risk. Ion Beam Applications is currently generating about -0.01 per unit of risk. If you would invest 8,411 in Volkswagen AG Non Vtg on October 11, 2024 and sell it today you would earn a total of 498.00 from holding Volkswagen AG Non Vtg or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG Non Vtg vs. Ion Beam Applications
Performance |
| Timeline |
| Volkswagen AG Non |
| Ion Beam Applications |
Volkswagen and Ion Beam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Ion Beam
The main advantage of trading using opposite Volkswagen and Ion Beam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Ion Beam 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 Ion Beam will offset losses from the drop in Ion Beam's long position.| Volkswagen vs. British American Tobacco | Volkswagen vs. Jupiter Fund Management | Volkswagen vs. Odfjell Drilling | Volkswagen vs. Software Circle plc |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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