Correlation Between Life Electric and Porsche Automobil
Can any of the company-specific risk be diversified away by investing in both Life Electric and Porsche Automobil 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 Life Electric and Porsche Automobil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Electric Vehicles and Porsche Automobil Holding, you can compare the effects of market volatilities on Life Electric and Porsche Automobil 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 Life Electric with a short position of Porsche Automobil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Electric and Porsche Automobil.
Diversification Opportunities for Life Electric and Porsche Automobil
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Life and Porsche is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Life Electric Vehicles and Porsche Automobil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porsche Automobil Holding and Life Electric 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 Life Electric Vehicles are associated (or correlated) with Porsche Automobil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porsche Automobil Holding has no effect on the direction of Life Electric i.e., Life Electric and Porsche Automobil go up and down completely randomly.
Pair Corralation between Life Electric and Porsche Automobil
Given the investment horizon of 90 days Life Electric Vehicles is expected to generate 6.66 times more return on investment than Porsche Automobil. However, Life Electric is 6.66 times more volatile than Porsche Automobil Holding. It trades about 0.03 of its potential returns per unit of risk. Porsche Automobil Holding is currently generating about -0.04 per unit of risk. If you would invest 125.00 in Life Electric Vehicles on September 4, 2024 and sell it today you would lose (100.00) from holding Life Electric Vehicles or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Electric Vehicles vs. Porsche Automobil Holding
Performance |
| Timeline |
| Life Electric Vehicles |
| Porsche Automobil Holding |
Life Electric and Porsche Automobil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Electric and Porsche Automobil
The main advantage of trading using opposite Life Electric and Porsche Automobil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Electric position performs unexpectedly, Porsche Automobil 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 Porsche Automobil will offset losses from the drop in Porsche Automobil's long position.| Life Electric vs. Porsche Automobil Holding | Life Electric vs. Porsche Automobile Holding | Life Electric vs. Volkswagen AG 110 | Life Electric vs. Bayerische Motoren Werke |
| Porsche Automobil vs. Volkswagen AG Pref | Porsche Automobil vs. Volkswagen AG 110 | Porsche Automobil vs. Ferrari NV | Porsche Automobil vs. Bayerische Motoren Werke |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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