Correlation Between Kering SA and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Kering SA 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 Kering SA and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kering SA and Volkswagen AG, you can compare the effects of market volatilities on Kering SA 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 Kering SA with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kering SA and Volkswagen.
Diversification Opportunities for Kering SA and Volkswagen
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kering and Volkswagen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kering SA and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Kering SA 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 Kering SA 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 Kering SA i.e., Kering SA and Volkswagen go up and down completely randomly.
Pair Corralation between Kering SA and Volkswagen
Assuming the 90 days horizon Kering SA is expected to under-perform the Volkswagen. In addition to that, Kering SA is 1.33 times more volatile than Volkswagen AG. It trades about -0.09 of its total potential returns per unit of risk. Volkswagen AG is currently generating about -0.08 per unit of volatility. If you would invest 14,122 in Volkswagen AG on August 31, 2024 and sell it today you would lose (5,882) from holding Volkswagen AG or give up 41.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Kering SA vs. Volkswagen AG
Performance |
| Timeline |
| Kering SA |
| Volkswagen AG |
Kering SA and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kering SA and Volkswagen
The main advantage of trading using opposite Kering SA and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kering SA 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.| Kering SA vs. TITANIUM TRANSPORTGROUP | Kering SA vs. NTG Nordic Transport | Kering SA vs. KAUFMAN ET BROAD | Kering SA vs. Gaztransport Technigaz SA |
| Volkswagen vs. American Eagle Outfitters | Volkswagen vs. EAT WELL INVESTMENT | Volkswagen vs. Strategic Investments AS | Volkswagen vs. AM EAGLE OUTFITTERS |
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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