Correlation Between AmeraMex International and Volkswagen
Can any of the company-specific risk be diversified away by investing in both AmeraMex International 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 AmeraMex International and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AmeraMex International and Volkswagen AG, you can compare the effects of market volatilities on AmeraMex International 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 AmeraMex International with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of AmeraMex International and Volkswagen.
Diversification Opportunities for AmeraMex International and Volkswagen
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between AmeraMex and Volkswagen is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding AmeraMex International and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and AmeraMex International 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 AmeraMex International 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 AmeraMex International i.e., AmeraMex International and Volkswagen go up and down completely randomly.
Pair Corralation between AmeraMex International and Volkswagen
Given the investment horizon of 90 days AmeraMex International is expected to generate 4.93 times more return on investment than Volkswagen. However, AmeraMex International is 4.93 times more volatile than Volkswagen AG. It trades about 0.03 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.04 per unit of risk. If you would invest 45.00 in AmeraMex International on August 29, 2024 and sell it today you would lose (24.00) from holding AmeraMex International or give up 53.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AmeraMex International vs. Volkswagen AG
Performance |
| Timeline |
| AmeraMex International |
| Volkswagen AG |
AmeraMex International and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AmeraMex International and Volkswagen
The main advantage of trading using opposite AmeraMex International and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AmeraMex International 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.| AmeraMex International vs. Buhler Industries | AmeraMex International vs. Ag Growth International | AmeraMex International vs. Grow Solutions Holdings | AmeraMex International vs. American Premium Water |
| Volkswagen vs. Buhler Industries | Volkswagen vs. AmeraMex International | Volkswagen vs. Textainer Group Holdings | Volkswagen vs. Deere Company |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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