Correlation Between Colt CZ and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Colt CZ 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 Colt CZ and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colt CZ Group and Volkswagen AG, you can compare the effects of market volatilities on Colt CZ 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 Colt CZ with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colt CZ and Volkswagen.
Diversification Opportunities for Colt CZ and Volkswagen
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Colt and Volkswagen is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Colt CZ Group and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Colt CZ 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 Colt CZ Group 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 Colt CZ i.e., Colt CZ and Volkswagen go up and down completely randomly.
Pair Corralation between Colt CZ and Volkswagen
Assuming the 90 days trading horizon Colt CZ Group is expected to generate 0.52 times more return on investment than Volkswagen. However, Colt CZ Group is 1.91 times less risky than Volkswagen. It trades about 0.05 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.05 per unit of risk. If you would invest 50,274 in Colt CZ Group on August 24, 2024 and sell it today you would earn a total of 12,526 from holding Colt CZ Group or generate 24.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Colt CZ Group vs. Volkswagen AG
Performance |
| Timeline |
| Colt CZ Group |
| Volkswagen AG |
Colt CZ and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colt CZ and Volkswagen
The main advantage of trading using opposite Colt CZ and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colt CZ 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.| Colt CZ vs. Cez AS | Colt CZ vs. Komercni Banka AS | Colt CZ vs. Moneta Money Bank | Colt CZ vs. Erste Group Bank |
| Volkswagen vs. Cez AS | Volkswagen vs. Kofola CeskoSlovensko as | Volkswagen vs. Primoco UAV SE | Volkswagen vs. MT 1997 AS |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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