Correlation Between Option Care and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Option Care 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 Option Care and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Option Care Health and Volkswagen AG, you can compare the effects of market volatilities on Option Care 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 Option Care with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Option Care and Volkswagen.
Diversification Opportunities for Option Care and Volkswagen
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Option and Volkswagen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Option Care Health and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Option Care 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 Option Care Health 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 Option Care i.e., Option Care and Volkswagen go up and down completely randomly.
Pair Corralation between Option Care and Volkswagen
Assuming the 90 days trading horizon Option Care Health is expected to generate 1.35 times more return on investment than Volkswagen. However, Option Care is 1.35 times more volatile than Volkswagen AG. It trades about -0.03 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.06 per unit of risk. If you would invest 2,720 in Option Care Health on August 27, 2024 and sell it today you would lose (600.00) from holding Option Care Health or give up 22.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Option Care Health vs. Volkswagen AG
Performance |
| Timeline |
| Option Care Health |
| Volkswagen AG |
Option Care and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Option Care and Volkswagen
The main advantage of trading using opposite Option Care and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Option Care 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.| Option Care vs. HYGEIA HC HLDGS | Option Care vs. Superior Plus Corp | Option Care vs. Origin Agritech | Option Care vs. Identiv |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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