Correlation Between Northern Data and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Northern Data 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 Northern Data and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Data AG and Volkswagen AG, you can compare the effects of market volatilities on Northern Data 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 Northern Data with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Data and Volkswagen.
Diversification Opportunities for Northern Data and Volkswagen
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northern and Volkswagen is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Northern Data AG and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Northern Data 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 Northern Data AG 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 Northern Data i.e., Northern Data and Volkswagen go up and down completely randomly.
Pair Corralation between Northern Data and Volkswagen
Assuming the 90 days trading horizon Northern Data AG is expected to generate 2.46 times more return on investment than Volkswagen. However, Northern Data is 2.46 times more volatile than Volkswagen AG. It trades about 0.16 of its potential returns per unit of risk. Volkswagen AG is currently generating about 0.36 per unit of risk. If you would invest 3,760 in Northern Data AG on October 30, 2024 and sell it today you would earn a total of 840.00 from holding Northern Data AG or generate 22.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Data AG vs. Volkswagen AG
Performance |
| Timeline |
| Northern Data AG |
| Volkswagen AG |
Northern Data and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Data and Volkswagen
The main advantage of trading using opposite Northern Data and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Data 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.| Northern Data vs. Coffee Holding Co | Northern Data vs. KENEDIX OFFICE INV | Northern Data vs. NURAN WIRELESS INC | Northern Data vs. FIREWEED METALS P |
| Volkswagen vs. Mobilezone Holding AG | Volkswagen vs. USWE SPORTS AB | Volkswagen vs. ANTA SPORTS PRODUCT | Volkswagen vs. Iridium Communications |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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