Correlation Between Volkswagen and MT Bank
Can any of the company-specific risk be diversified away by investing in both Volkswagen and MT Bank 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 MT Bank 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 MT Bank Corp, you can compare the effects of market volatilities on Volkswagen and MT Bank 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 MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and MT Bank.
Diversification Opportunities for Volkswagen and MT Bank
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and 0JW2 is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Non Vtg and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp 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 MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of Volkswagen i.e., Volkswagen and MT Bank go up and down completely randomly.
Pair Corralation between Volkswagen and MT Bank
Assuming the 90 days trading horizon Volkswagen AG Non Vtg is expected to under-perform the MT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG Non Vtg is 1.23 times less risky than MT Bank. The stock trades about -0.01 of its potential returns per unit of risk. The MT Bank Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 14,411 in MT Bank Corp on October 12, 2024 and sell it today you would earn a total of 4,335 from holding MT Bank Corp or generate 30.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 94.38% |
| Values | Daily Returns |
Volkswagen AG Non Vtg vs. MT Bank Corp
Performance |
| Timeline |
| Volkswagen AG Non |
| MT Bank Corp |
Volkswagen and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and MT Bank
The main advantage of trading using opposite Volkswagen and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, MT Bank 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 MT Bank will offset losses from the drop in MT Bank's long position.| Volkswagen vs. DFS Furniture PLC | Volkswagen vs. Atalaya Mining | Volkswagen vs. Panther Metals PLC | Volkswagen vs. Cornish Metals |
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.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |