Correlation Between BANK HANDLOWY and Volkswagen
Can any of the company-specific risk be diversified away by investing in both BANK HANDLOWY 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 BANK HANDLOWY and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK HANDLOWY and Volkswagen AG, you can compare the effects of market volatilities on BANK HANDLOWY 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 BANK HANDLOWY with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK HANDLOWY and Volkswagen.
Diversification Opportunities for BANK HANDLOWY and Volkswagen
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BANK and Volkswagen is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BANK HANDLOWY and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY i.e., BANK HANDLOWY and Volkswagen go up and down completely randomly.
Pair Corralation between BANK HANDLOWY and Volkswagen
Assuming the 90 days trading horizon BANK HANDLOWY is expected to generate 0.32 times more return on investment than Volkswagen. However, BANK HANDLOWY is 3.17 times less risky than Volkswagen. It trades about -0.39 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.4 per unit of risk. If you would invest 2,110 in BANK HANDLOWY on August 24, 2024 and sell it today you would lose (80.00) from holding BANK HANDLOWY or give up 3.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK HANDLOWY vs. Volkswagen AG
Performance |
| Timeline |
| BANK HANDLOWY |
| Volkswagen AG |
BANK HANDLOWY and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK HANDLOWY and Volkswagen
The main advantage of trading using opposite BANK HANDLOWY and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK HANDLOWY 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.| BANK HANDLOWY vs. Astral Foods Limited | BANK HANDLOWY vs. Magnachip Semiconductor | BANK HANDLOWY vs. ELMOS SEMICONDUCTOR | BANK HANDLOWY vs. BE Semiconductor Industries |
| Volkswagen vs. National Health Investors | Volkswagen vs. Bumrungrad Hospital Public | Volkswagen vs. SWISS WATER DECAFFCOFFEE | Volkswagen vs. BW OFFSHORE LTD |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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