Correlation Between BLUESCOPE STEEL and VOLKSWAGEN
Can any of the company-specific risk be diversified away by investing in both BLUESCOPE STEEL 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 BLUESCOPE STEEL and VOLKSWAGEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BLUESCOPE STEEL and VOLKSWAGEN AG VZ, you can compare the effects of market volatilities on BLUESCOPE STEEL 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 BLUESCOPE STEEL with a short position of VOLKSWAGEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of BLUESCOPE STEEL and VOLKSWAGEN.
Diversification Opportunities for BLUESCOPE STEEL and VOLKSWAGEN
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BLUESCOPE and VOLKSWAGEN is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL and VOLKSWAGEN AG VZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOLKSWAGEN AG VZ and BLUESCOPE STEEL 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 BLUESCOPE STEEL 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 VZ has no effect on the direction of BLUESCOPE STEEL i.e., BLUESCOPE STEEL and VOLKSWAGEN go up and down completely randomly.
Pair Corralation between BLUESCOPE STEEL and VOLKSWAGEN
Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to generate 1.1 times more return on investment than VOLKSWAGEN. However, BLUESCOPE STEEL is 1.1 times more volatile than VOLKSWAGEN AG VZ. It trades about 0.04 of its potential returns per unit of risk. VOLKSWAGEN AG VZ is currently generating about -0.02 per unit of risk. If you would invest 1,047 in BLUESCOPE STEEL on September 4, 2024 and sell it today you would earn a total of 313.00 from holding BLUESCOPE STEEL or generate 29.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BLUESCOPE STEEL vs. VOLKSWAGEN AG VZ
Performance |
| Timeline |
| BLUESCOPE STEEL |
| VOLKSWAGEN AG VZ |
BLUESCOPE STEEL and VOLKSWAGEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BLUESCOPE STEEL and VOLKSWAGEN
The main advantage of trading using opposite BLUESCOPE STEEL and VOLKSWAGEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUESCOPE STEEL 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.| BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc | BLUESCOPE STEEL vs. Apple Inc |
| VOLKSWAGEN vs. Tesla Inc | VOLKSWAGEN vs. Toyota Motor | VOLKSWAGEN vs. BYD Company Limited | VOLKSWAGEN vs. Superior Plus Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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