Correlation Between Volkswagen and Panasonic Corp
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Panasonic Corp 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 Panasonic Corp 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 Panasonic Corp, you can compare the effects of market volatilities on Volkswagen and Panasonic Corp 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 Panasonic Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Panasonic Corp.
Diversification Opportunities for Volkswagen and Panasonic Corp
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Volkswagen and Panasonic is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Non Vtg and Panasonic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panasonic 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 Panasonic Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panasonic Corp has no effect on the direction of Volkswagen i.e., Volkswagen and Panasonic Corp go up and down completely randomly.
Pair Corralation between Volkswagen and Panasonic Corp
Assuming the 90 days trading horizon Volkswagen AG Non Vtg is expected to generate 1.12 times more return on investment than Panasonic Corp. However, Volkswagen is 1.12 times more volatile than Panasonic Corp. It trades about 0.17 of its potential returns per unit of risk. Panasonic Corp is currently generating about -0.01 per unit of risk. If you would invest 8,610 in Volkswagen AG Non Vtg on October 12, 2024 and sell it today you would earn a total of 445.00 from holding Volkswagen AG Non Vtg or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 45.0% |
| Values | Daily Returns |
Volkswagen AG Non Vtg vs. Panasonic Corp
Performance |
| Timeline |
| Volkswagen AG Non |
| Panasonic Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Volkswagen and Panasonic Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Panasonic Corp
The main advantage of trading using opposite Volkswagen and Panasonic Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Panasonic Corp 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 Panasonic Corp will offset losses from the drop in Panasonic Corp's long position.| Volkswagen vs. DFS Furniture PLC | Volkswagen vs. Atalaya Mining | Volkswagen vs. Panther Metals PLC | Volkswagen vs. Cornish Metals |
| Panasonic Corp vs. Future Metals NL | Panasonic Corp vs. Golden Metal Resources | Panasonic Corp vs. Ross Stores | Panasonic Corp vs. Westlake Chemical Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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