Correlation Between Volkswagen and Stanley Black
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Stanley Black 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 Stanley Black 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 Stanley Black Decker, you can compare the effects of market volatilities on Volkswagen and Stanley Black 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 Stanley Black. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Stanley Black.
Diversification Opportunities for Volkswagen and Stanley Black
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Volkswagen and Stanley is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Non Vtg and Stanley Black Decker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stanley Black Decker 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 Stanley Black. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stanley Black Decker has no effect on the direction of Volkswagen i.e., Volkswagen and Stanley Black go up and down completely randomly.
Pair Corralation between Volkswagen and Stanley Black
Assuming the 90 days trading horizon Volkswagen AG Non Vtg is expected to generate 1.1 times more return on investment than Stanley Black. However, Volkswagen is 1.1 times more volatile than Stanley Black Decker. It trades about 0.32 of its potential returns per unit of risk. Stanley Black Decker is currently generating about 0.24 per unit of risk. If you would invest 8,641 in Volkswagen AG Non Vtg on October 25, 2024 and sell it today you would earn a total of 737.00 from holding Volkswagen AG Non Vtg or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Volkswagen AG Non Vtg vs. Stanley Black Decker
Performance |
| Timeline |
| Volkswagen AG Non |
| Stanley Black Decker |
Volkswagen and Stanley Black Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Stanley Black
The main advantage of trading using opposite Volkswagen and Stanley Black positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Stanley Black 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 Stanley Black will offset losses from the drop in Stanley Black's long position.| Volkswagen vs. Atresmedia | Volkswagen vs. Centaur Media | Volkswagen vs. AcadeMedia AB | Volkswagen vs. G5 Entertainment AB |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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