Correlation Between Singapore Airlines and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Singapore Airlines 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 Singapore Airlines and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singapore Airlines Limited and Volkswagen AG, you can compare the effects of market volatilities on Singapore Airlines 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 Singapore Airlines with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singapore Airlines and Volkswagen.
Diversification Opportunities for Singapore Airlines and Volkswagen
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Singapore and Volkswagen is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Airlines Limited and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Singapore Airlines 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 Singapore Airlines Limited 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 Singapore Airlines i.e., Singapore Airlines and Volkswagen go up and down completely randomly.
Pair Corralation between Singapore Airlines and Volkswagen
Assuming the 90 days trading horizon Singapore Airlines Limited is expected to generate 0.78 times more return on investment than Volkswagen. However, Singapore Airlines Limited is 1.29 times less risky than Volkswagen. It trades about 0.06 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.13 per unit of risk. If you would invest 391.00 in Singapore Airlines Limited on September 1, 2024 and sell it today you would earn a total of 51.00 from holding Singapore Airlines Limited or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.48% |
| Values | Daily Returns |
Singapore Airlines Limited vs. Volkswagen AG
Performance |
| Timeline |
| Singapore Airlines |
| Volkswagen AG |
Singapore Airlines and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Singapore Airlines and Volkswagen
The main advantage of trading using opposite Singapore Airlines and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Airlines 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.| Singapore Airlines vs. Southwest Airlines Co | Singapore Airlines vs. Superior Plus Corp | Singapore Airlines vs. NMI Holdings | Singapore Airlines vs. Origin Agritech |
| Volkswagen vs. SIVERS SEMICONDUCTORS AB | Volkswagen vs. Darden Restaurants | Volkswagen vs. Reliance Steel Aluminum | Volkswagen vs. Q2M Managementberatung 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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