Correlation Between NFI and Volkswagen
Can any of the company-specific risk be diversified away by investing in both NFI 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 NFI and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NFI Group and Volkswagen AG 110, you can compare the effects of market volatilities on NFI 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 NFI with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of NFI and Volkswagen.
Diversification Opportunities for NFI and Volkswagen
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NFI and Volkswagen is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NFI Group 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 NFI 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 NFI Group 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 NFI i.e., NFI and Volkswagen go up and down completely randomly.
Pair Corralation between NFI and Volkswagen
Assuming the 90 days horizon NFI Group is expected to generate 1.44 times more return on investment than Volkswagen. However, NFI is 1.44 times more volatile than Volkswagen AG 110. It trades about 0.02 of its potential returns per unit of risk. Volkswagen AG 110 is currently generating about -0.06 per unit of risk. If you would invest 991.00 in NFI Group on August 24, 2024 and sell it today you would earn a total of 54.00 from holding NFI Group or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
NFI Group vs. Volkswagen AG 110
Performance |
| Timeline |
| NFI Group |
| Volkswagen AG 110 |
NFI and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NFI and Volkswagen
The main advantage of trading using opposite NFI and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NFI 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.| NFI vs. Zapp Electric Vehicles | NFI vs. Guangzhou Automobile Group | NFI vs. Exor NV | NFI vs. Aston Martin Lagonda |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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