Correlation Between Porsche Automobil and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Porsche Automobil 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 Porsche Automobil and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Porsche Automobil Holding and Volkswagen AG 110, you can compare the effects of market volatilities on Porsche Automobil 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 Porsche Automobil with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porsche Automobil and Volkswagen.
Diversification Opportunities for Porsche Automobil and Volkswagen
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Porsche and Volkswagen is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Porsche Automobil Holding 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 Porsche Automobil 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 Porsche Automobil Holding 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 Porsche Automobil i.e., Porsche Automobil and Volkswagen go up and down completely randomly.
Pair Corralation between Porsche Automobil and Volkswagen
Assuming the 90 days horizon Porsche Automobil Holding is expected to under-perform the Volkswagen. In addition to that, Porsche Automobil is 1.15 times more volatile than Volkswagen AG 110. It trades about -0.34 of its total potential returns per unit of risk. Volkswagen AG 110 is currently generating about -0.34 per unit of volatility. If you would invest 1,031 in Volkswagen AG 110 on August 28, 2024 and sell it today you would lose (153.00) from holding Volkswagen AG 110 or give up 14.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Porsche Automobil Holding vs. Volkswagen AG 110
Performance |
| Timeline |
| Porsche Automobil Holding |
| Volkswagen AG 110 |
Porsche Automobil and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Porsche Automobil and Volkswagen
The main advantage of trading using opposite Porsche Automobil and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Porsche Automobil 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.| Porsche Automobil vs. Isuzu Motors | Porsche Automobil vs. Renault SA | Porsche Automobil vs. Toyota Motor Corp | Porsche Automobil vs. Porsche Automobile Holding |
| Volkswagen vs. FitLife Brands, Common | Volkswagen vs. HUMANA INC | Volkswagen vs. SCOR PK | Volkswagen vs. Aquagold International |
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 Correlations module to find global opportunities by holding instruments from different markets.
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