Correlation Between NEL ASA and Volkswagen
Can any of the company-specific risk be diversified away by investing in both NEL ASA 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 NEL ASA and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEL ASA ADR30 and Volkswagen AG, you can compare the effects of market volatilities on NEL ASA 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 NEL ASA with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEL ASA and Volkswagen.
Diversification Opportunities for NEL ASA and Volkswagen
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NEL and Volkswagen is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding NEL ASA ADR30 and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and NEL ASA 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 NEL ASA ADR30 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 NEL ASA i.e., NEL ASA and Volkswagen go up and down completely randomly.
Pair Corralation between NEL ASA and Volkswagen
Assuming the 90 days trading horizon NEL ASA ADR30 is expected to under-perform the Volkswagen. In addition to that, NEL ASA is 1.94 times more volatile than Volkswagen AG. It trades about -0.29 of its total potential returns per unit of risk. Volkswagen AG is currently generating about -0.33 per unit of volatility. If you would invest 10,990 in Volkswagen AG on January 18, 2025 and sell it today you would lose (1,900) from holding Volkswagen AG or give up 17.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEL ASA ADR30 vs. Volkswagen AG
Performance |
| Timeline |
| NEL ASA ADR30 |
| Volkswagen AG |
NEL ASA and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEL ASA and Volkswagen
The main advantage of trading using opposite NEL ASA and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEL ASA 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.| NEL ASA vs. Indutrade AB | NEL ASA vs. Tradegate AG Wertpapierhandelsbank | NEL ASA vs. EBRO FOODS | NEL ASA vs. DaChan Food Limited |
| Volkswagen vs. COGNYTE SOFTWARE LTD | Volkswagen vs. Marie Brizard Wine | Volkswagen vs. Mobilezone Holding AG | Volkswagen vs. INTERSHOP Communications Aktiengesellschaft |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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