Correlation Between Porsche Automobile and Aston Martin
Can any of the company-specific risk be diversified away by investing in both Porsche Automobile and Aston Martin 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 Automobile and Aston Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Porsche Automobile Holding and Aston Martin Lagonda, you can compare the effects of market volatilities on Porsche Automobile and Aston Martin 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 Automobile with a short position of Aston Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porsche Automobile and Aston Martin.
Diversification Opportunities for Porsche Automobile and Aston Martin
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Porsche and Aston is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Porsche Automobile Holding and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda and Porsche Automobile 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 Automobile Holding are associated (or correlated) with Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Porsche Automobile i.e., Porsche Automobile and Aston Martin go up and down completely randomly.
Pair Corralation between Porsche Automobile and Aston Martin
Assuming the 90 days horizon Porsche Automobile Holding is expected to under-perform the Aston Martin. But the pink sheet apears to be less risky and, when comparing its historical volatility, Porsche Automobile Holding is 1.55 times less risky than Aston Martin. The pink sheet trades about -0.29 of its potential returns per unit of risk. The Aston Martin Lagonda is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 139.00 in Aston Martin Lagonda on August 31, 2024 and sell it today you would lose (12.00) from holding Aston Martin Lagonda or give up 8.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Porsche Automobile Holding vs. Aston Martin Lagonda
Performance |
| Timeline |
| Porsche Automobile |
| Aston Martin Lagonda |
Porsche Automobile and Aston Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Porsche Automobile and Aston Martin
The main advantage of trading using opposite Porsche Automobile and Aston Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Porsche Automobile position performs unexpectedly, Aston Martin 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 Aston Martin will offset losses from the drop in Aston Martin's long position.| Porsche Automobile vs. Volkswagen AG 110 | Porsche Automobile vs. Stellantis NV | Porsche Automobile vs. Toyota Motor | Porsche Automobile vs. Honda Motor Co |
| Aston Martin vs. Geely Automobile Holdings | Aston Martin vs. Guangzhou Automobile Group | Aston Martin vs. Dowlais Group plc | Aston Martin vs. NFI Group |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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