Correlation Between Smurfit Kappa and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Smurfit Kappa 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 Smurfit Kappa and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smurfit Kappa Group and Volkswagen AG, you can compare the effects of market volatilities on Smurfit Kappa 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 Smurfit Kappa with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smurfit Kappa and Volkswagen.
Diversification Opportunities for Smurfit Kappa and Volkswagen
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Smurfit and Volkswagen is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Smurfit Kappa Group and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Smurfit Kappa 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 Smurfit Kappa 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 has no effect on the direction of Smurfit Kappa i.e., Smurfit Kappa and Volkswagen go up and down completely randomly.
Pair Corralation between Smurfit Kappa and Volkswagen
Assuming the 90 days horizon Smurfit Kappa Group is expected to generate 1.81 times more return on investment than Volkswagen. However, Smurfit Kappa is 1.81 times more volatile than Volkswagen AG. It trades about 0.14 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.31 per unit of risk. If you would invest 4,730 in Smurfit Kappa Group on September 1, 2024 and sell it today you would earn a total of 340.00 from holding Smurfit Kappa Group or generate 7.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Smurfit Kappa Group vs. Volkswagen AG
Performance |
| Timeline |
| Smurfit Kappa Group |
| Volkswagen AG |
Smurfit Kappa and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smurfit Kappa and Volkswagen
The main advantage of trading using opposite Smurfit Kappa and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smurfit Kappa 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.| Smurfit Kappa vs. Packaging of | Smurfit Kappa vs. Superior Plus Corp | Smurfit Kappa vs. Origin Agritech | Smurfit Kappa vs. Identiv |
| Volkswagen vs. Verizon Communications | Volkswagen vs. CarsalesCom | Volkswagen vs. Entravision Communications | Volkswagen vs. Lamar Advertising |
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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