Correlation Between Prosiebensat and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Prosiebensat and Volkswagen 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 Prosiebensat and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosiebensat 1 Media and Volkswagen AG, you can compare the effects of market volatilities on Prosiebensat and Volkswagen 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 Prosiebensat with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and Volkswagen.
Diversification Opportunities for Prosiebensat and Volkswagen
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Prosiebensat and Volkswagen is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Prosiebensat 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 Prosiebensat 1 Media are associated (or correlated) with Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Prosiebensat i.e., Prosiebensat and Volkswagen go up and down completely randomly.
Pair Corralation between Prosiebensat and Volkswagen
Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the Volkswagen. In addition to that, Prosiebensat is 1.68 times more volatile than Volkswagen AG. It trades about -0.03 of its total potential returns per unit of risk. Volkswagen AG is currently generating about -0.04 per unit of volatility. If you would invest 14,680 in Volkswagen AG on October 28, 2024 and sell it today you would lose (4,602) from holding Volkswagen AG or give up 31.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosiebensat 1 Media vs. Volkswagen AG
Performance |
| Timeline |
| Prosiebensat 1 Media |
| Volkswagen AG |
Prosiebensat and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosiebensat and Volkswagen
The main advantage of trading using opposite Prosiebensat and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosiebensat position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Prosiebensat vs. Discover Financial Services | Prosiebensat vs. Roebuck Food Group | Prosiebensat vs. Commerzbank AG | Prosiebensat vs. Axfood AB |
| Volkswagen vs. European Metals Holdings | Volkswagen vs. Eco Animal Health | Volkswagen vs. Eastinco Mining Exploration | Volkswagen vs. GreenX 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.
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