Correlation Between ALERION CLEANPOWER and Volkswagen
Can any of the company-specific risk be diversified away by investing in both ALERION CLEANPOWER 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 ALERION CLEANPOWER and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALERION CLEANPOWER and Volkswagen AG, you can compare the effects of market volatilities on ALERION CLEANPOWER 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 ALERION CLEANPOWER with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALERION CLEANPOWER and Volkswagen.
Diversification Opportunities for ALERION CLEANPOWER and Volkswagen
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ALERION and Volkswagen is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER i.e., ALERION CLEANPOWER and Volkswagen go up and down completely randomly.
Pair Corralation between ALERION CLEANPOWER and Volkswagen
Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the Volkswagen. In addition to that, ALERION CLEANPOWER is 1.46 times more volatile than Volkswagen AG. It trades about -0.06 of its total potential returns per unit of risk. Volkswagen AG is currently generating about -0.05 per unit of volatility. If you would invest 11,150 in Volkswagen AG on September 19, 2024 and sell it today you would lose (2,275) from holding Volkswagen AG or give up 20.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALERION CLEANPOWER vs. Volkswagen AG
Performance |
| Timeline |
| ALERION CLEANPOWER |
| Volkswagen AG |
ALERION CLEANPOWER and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALERION CLEANPOWER and Volkswagen
The main advantage of trading using opposite ALERION CLEANPOWER and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALERION CLEANPOWER 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.| ALERION CLEANPOWER vs. PNE AG | ALERION CLEANPOWER vs. Lyxor 1 | ALERION CLEANPOWER vs. Xtrackers ShortDAX | ALERION CLEANPOWER vs. Xtrackers LevDAX |
| Volkswagen vs. AIR PRODCHEMICALS | Volkswagen vs. HEMISPHERE EGY | Volkswagen vs. China BlueChemical | Volkswagen vs. Eastman Chemical |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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