Correlation Between Food Life and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Food Life 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 Food Life and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Food Life Companies and Volkswagen AG, you can compare the effects of market volatilities on Food Life 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 Food Life with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and Volkswagen.
Diversification Opportunities for Food Life and Volkswagen
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Food and Volkswagen is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Food Life 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 Food Life Companies 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 Food Life i.e., Food Life and Volkswagen go up and down completely randomly.
Pair Corralation between Food Life and Volkswagen
Assuming the 90 days horizon Food Life Companies is expected to generate 1.51 times more return on investment than Volkswagen. However, Food Life is 1.51 times more volatile than Volkswagen AG. It trades about 0.26 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.5 per unit of risk. If you would invest 1,770 in Food Life Companies on August 29, 2024 and sell it today you would earn a total of 200.00 from holding Food Life Companies or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Food Life Companies vs. Volkswagen AG
Performance |
| Timeline |
| Food Life Companies |
| Volkswagen AG |
Food Life and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and Volkswagen
The main advantage of trading using opposite Food Life and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life 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.| Food Life vs. Superior Plus Corp | Food Life vs. NMI Holdings | Food Life vs. Origin Agritech | Food Life vs. SIVERS SEMICONDUCTORS AB |
| Volkswagen vs. REVO INSURANCE SPA | Volkswagen vs. The Hanover Insurance | Volkswagen vs. Mizuho Financial Group | Volkswagen vs. National Bank Holdings |
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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