Correlation Between G5 Entertainment and Volkswagen
Can any of the company-specific risk be diversified away by investing in both G5 Entertainment 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 G5 Entertainment and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G5 Entertainment AB and Volkswagen AG Non Vtg, you can compare the effects of market volatilities on G5 Entertainment 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 G5 Entertainment with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of G5 Entertainment and Volkswagen.
Diversification Opportunities for G5 Entertainment and Volkswagen
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 0QUS and Volkswagen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding G5 Entertainment AB and Volkswagen AG Non Vtg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG Non and G5 Entertainment 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 G5 Entertainment AB 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 Non has no effect on the direction of G5 Entertainment i.e., G5 Entertainment and Volkswagen go up and down completely randomly.
Pair Corralation between G5 Entertainment and Volkswagen
Assuming the 90 days trading horizon G5 Entertainment AB is expected to generate 1.49 times more return on investment than Volkswagen. However, G5 Entertainment is 1.49 times more volatile than Volkswagen AG Non Vtg. It trades about 0.05 of its potential returns per unit of risk. Volkswagen AG Non Vtg is currently generating about 0.03 per unit of risk. If you would invest 11,500 in G5 Entertainment AB on November 4, 2024 and sell it today you would earn a total of 1,500 from holding G5 Entertainment AB or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
G5 Entertainment AB vs. Volkswagen AG Non Vtg
Performance |
| Timeline |
| G5 Entertainment |
| Volkswagen AG Non |
G5 Entertainment and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G5 Entertainment and Volkswagen
The main advantage of trading using opposite G5 Entertainment and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G5 Entertainment 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.| G5 Entertainment vs. Heavitree Brewery | G5 Entertainment vs. Discover Financial Services | G5 Entertainment vs. Vulcan Materials Co | G5 Entertainment vs. Software Circle plc |
| Volkswagen vs. Premier Foods PLC | Volkswagen vs. LPKF Laser Electronics | Volkswagen vs. Dentsply Sirona | Volkswagen vs. United States Steel |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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