Correlation Between Hays Plc and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Hays Plc 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 Hays Plc and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hays plc and Volkswagen AG, you can compare the effects of market volatilities on Hays Plc 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 Hays Plc with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hays Plc and Volkswagen.
Diversification Opportunities for Hays Plc and Volkswagen
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hays and Volkswagen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hays plc and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Hays Plc 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 Hays plc 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 Hays Plc i.e., Hays Plc and Volkswagen go up and down completely randomly.
Pair Corralation between Hays Plc and Volkswagen
Assuming the 90 days horizon Hays plc is expected to generate 1.65 times more return on investment than Volkswagen. However, Hays Plc is 1.65 times more volatile than Volkswagen AG. It trades about -0.01 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.06 per unit of risk. If you would invest 126.00 in Hays plc on September 2, 2024 and sell it today you would lose (32.00) from holding Hays plc or give up 25.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hays plc vs. Volkswagen AG
Performance |
| Timeline |
| Hays plc |
| Volkswagen AG |
Hays Plc and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hays Plc and Volkswagen
The main advantage of trading using opposite Hays Plc and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hays Plc 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.| Hays Plc vs. National Bank Holdings | Hays Plc vs. SEI INVESTMENTS | Hays Plc vs. EAT WELL INVESTMENT | Hays Plc vs. SLR Investment Corp |
| Volkswagen vs. SIVERS SEMICONDUCTORS AB | Volkswagen vs. Darden Restaurants | Volkswagen vs. Reliance Steel Aluminum | Volkswagen vs. Q2M Managementberatung 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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