Correlation Between Volkswagen and Erste Group
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Erste Group 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 Erste Group 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 Erste Group Bank, you can compare the effects of market volatilities on Volkswagen and Erste Group 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 Erste Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Erste Group.
Diversification Opportunities for Volkswagen and Erste Group
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Volkswagen and Erste is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Non Vtg and Erste Group Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erste Group Bank 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 Erste Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erste Group Bank has no effect on the direction of Volkswagen i.e., Volkswagen and Erste Group go up and down completely randomly.
Pair Corralation between Volkswagen and Erste Group
Assuming the 90 days trading horizon Volkswagen AG Non Vtg is expected to generate 1.26 times more return on investment than Erste Group. However, Volkswagen is 1.26 times more volatile than Erste Group Bank. It trades about 0.32 of its potential returns per unit of risk. Erste Group Bank is currently generating about 0.25 per unit of risk. If you would invest 8,641 in Volkswagen AG Non Vtg on October 24, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG Non Vtg vs. Erste Group Bank
Performance |
| Timeline |
| Volkswagen AG Non |
| Erste Group Bank |
Volkswagen and Erste Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Erste Group
The main advantage of trading using opposite Volkswagen and Erste Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Erste Group 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 Erste Group will offset losses from the drop in Erste Group's long position.| Volkswagen vs. Atresmedia | Volkswagen vs. Centaur Media | Volkswagen vs. AcadeMedia AB | Volkswagen vs. G5 Entertainment AB |
| Erste Group vs. Manulife Financial Corp | Erste Group vs. Atalaya Mining | Erste Group vs. Bisichi Mining PLC | Erste Group vs. St Galler Kantonalbank |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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