Correlation Between BYD Co and Volkswagen
Can any of the company-specific risk be diversified away by investing in both BYD Co 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 BYD Co and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BYD Co and Volkswagen AG Non Vtg, you can compare the effects of market volatilities on BYD Co 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 BYD Co with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of BYD Co and Volkswagen.
Diversification Opportunities for BYD Co and Volkswagen
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between BYD and Volkswagen is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding BYD Co 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 BYD Co 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 BYD Co 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 BYD Co i.e., BYD Co and Volkswagen go up and down completely randomly.
Pair Corralation between BYD Co and Volkswagen
Assuming the 90 days trading horizon BYD Co is expected to generate 1.93 times more return on investment than Volkswagen. However, BYD Co is 1.93 times more volatile than Volkswagen AG Non Vtg. It trades about 0.02 of its potential returns per unit of risk. Volkswagen AG Non Vtg is currently generating about -0.26 per unit of risk. If you would invest 3,561 in BYD Co on August 30, 2024 and sell it today you would lose (1.00) from holding BYD Co or give up 0.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BYD Co vs. Volkswagen AG Non Vtg
Performance |
| Timeline |
| BYD Co |
| Volkswagen AG Non |
BYD Co and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BYD Co and Volkswagen
The main advantage of trading using opposite BYD Co and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BYD Co 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.| BYD Co vs. Lendinvest PLC | BYD Co vs. Neometals | BYD Co vs. Albion Technology General | BYD Co vs. Jupiter Fund Management |
| Volkswagen vs. Toyota Motor Corp | Volkswagen vs. OTP Bank Nyrt | Volkswagen vs. Cognizant Technology Solutions | Volkswagen vs. Lendinvest PLC |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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