Correlation Between Canoo and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Canoo 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 Canoo and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canoo Inc and Volkswagen AG 110, you can compare the effects of market volatilities on Canoo 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 Canoo with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoo and Volkswagen.
Diversification Opportunities for Canoo and Volkswagen
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Canoo and Volkswagen is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Inc and Volkswagen AG 110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 110 and Canoo 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 Canoo Inc 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 110 has no effect on the direction of Canoo i.e., Canoo and Volkswagen go up and down completely randomly.
Pair Corralation between Canoo and Volkswagen
Given the investment horizon of 90 days Canoo Inc is expected to under-perform the Volkswagen. In addition to that, Canoo is 5.69 times more volatile than Volkswagen AG 110. It trades about -0.11 of its total potential returns per unit of risk. Volkswagen AG 110 is currently generating about -0.05 per unit of volatility. If you would invest 1,232 in Volkswagen AG 110 on September 14, 2024 and sell it today you would lose (300.00) from holding Volkswagen AG 110 or give up 24.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Canoo Inc vs. Volkswagen AG 110
Performance |
| Timeline |
| Canoo Inc |
| Volkswagen AG 110 |
Canoo and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canoo and Volkswagen
The main advantage of trading using opposite Canoo and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoo 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.| Canoo vs. Lucid Group | Canoo vs. Rivian Automotive | Canoo vs. Polestar Automotive Holding | Canoo vs. Mullen Automotive |
| Volkswagen vs. Porsche Automobile Holding | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Volkswagen AG | Volkswagen vs. Mercedes Benz Group AG |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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