Correlation Between Cornish Metals and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Cornish Metals 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 Cornish Metals and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and Volkswagen AG Non Vtg, you can compare the effects of market volatilities on Cornish Metals 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 Cornish Metals with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and Volkswagen.
Diversification Opportunities for Cornish Metals and Volkswagen
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cornish and Volkswagen is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals 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 Cornish Metals 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 Cornish Metals 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 Cornish Metals i.e., Cornish Metals and Volkswagen go up and down completely randomly.
Pair Corralation between Cornish Metals and Volkswagen
Assuming the 90 days trading horizon Cornish Metals is expected to generate 1.53 times more return on investment than Volkswagen. However, Cornish Metals is 1.53 times more volatile than Volkswagen AG Non Vtg. It trades about 0.22 of its potential returns per unit of risk. Volkswagen AG Non Vtg is currently generating about 0.14 per unit of risk. If you would invest 835.00 in Cornish Metals on October 12, 2024 and sell it today you would earn a total of 90.00 from holding Cornish Metals or generate 10.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornish Metals vs. Volkswagen AG Non Vtg
Performance |
| Timeline |
| Cornish Metals |
| Volkswagen AG Non |
Cornish Metals and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and Volkswagen
The main advantage of trading using opposite Cornish Metals and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals 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.| Cornish Metals vs. Zegona Communications Plc | Cornish Metals vs. Omega Healthcare Investors | Cornish Metals vs. Induction Healthcare Group | Cornish Metals vs. Inspiration Healthcare Group |
| Volkswagen vs. DFS Furniture PLC | Volkswagen vs. Atalaya Mining | Volkswagen vs. Panther Metals PLC | Volkswagen vs. Cornish Metals |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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