Correlation Between Suzuki and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Suzuki 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 Suzuki and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suzuki Motor and Volkswagen AG 110, you can compare the effects of market volatilities on Suzuki 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 Suzuki with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzuki and Volkswagen.
Diversification Opportunities for Suzuki and Volkswagen
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Suzuki and Volkswagen is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Suzuki Motor and Volkswagen AG 110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 110 and Suzuki 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 Suzuki Motor 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 110 has no effect on the direction of Suzuki i.e., Suzuki and Volkswagen go up and down completely randomly.
Pair Corralation between Suzuki and Volkswagen
Assuming the 90 days horizon Suzuki Motor is expected to generate 0.99 times more return on investment than Volkswagen. However, Suzuki Motor is 1.01 times less risky than Volkswagen. It trades about 0.22 of its potential returns per unit of risk. Volkswagen AG 110 is currently generating about -0.26 per unit of risk. If you would invest 968.00 in Suzuki Motor on September 2, 2024 and sell it today you would earn a total of 88.00 from holding Suzuki Motor or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suzuki Motor vs. Volkswagen AG 110
Performance |
| Timeline |
| Suzuki Motor |
| Volkswagen AG 110 |
Suzuki and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suzuki and Volkswagen
The main advantage of trading using opposite Suzuki and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suzuki 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.| Suzuki vs. Volkswagen AG 110 | Suzuki vs. Stellantis NV | Suzuki vs. Toyota Motor | Suzuki vs. Honda Motor Co |
| Volkswagen vs. Porsche Automobile Holding | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Volkswagen AG | Volkswagen vs. Mercedes Benz Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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