Correlation Between Stellantis and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Stellantis 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 Stellantis and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellantis NV and Volkswagen AG Pref, you can compare the effects of market volatilities on Stellantis 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 Stellantis with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellantis and Volkswagen.
Diversification Opportunities for Stellantis and Volkswagen
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stellantis and Volkswagen is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Stellantis NV and Volkswagen AG Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG Pref and Stellantis 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 Stellantis NV 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 Pref has no effect on the direction of Stellantis i.e., Stellantis and Volkswagen go up and down completely randomly.
Pair Corralation between Stellantis and Volkswagen
Given the investment horizon of 90 days Stellantis NV is expected to generate 0.91 times more return on investment than Volkswagen. However, Stellantis NV is 1.1 times less risky than Volkswagen. It trades about -0.06 of its potential returns per unit of risk. Volkswagen AG Pref is currently generating about -0.35 per unit of risk. If you would invest 1,375 in Stellantis NV on August 28, 2024 and sell it today you would lose (38.00) from holding Stellantis NV or give up 2.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Stellantis NV vs. Volkswagen AG Pref
Performance |
| Timeline |
| Stellantis NV |
| Volkswagen AG Pref |
Stellantis and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellantis and Volkswagen
The main advantage of trading using opposite Stellantis and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellantis 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.| Stellantis vs. Porsche Automobile Holding | Stellantis vs. Toyota Motor | Stellantis vs. Honda Motor Co | Stellantis vs. General Motors |
| Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Porsche Automobil Holding | Volkswagen vs. Ferrari NV | Volkswagen vs. Bayerische Motoren Werke |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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