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 Corp and Volkswagen AG VZO, 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
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Suzuki and Volkswagen is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Suzuki Motor Corp and Volkswagen AG VZO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG VZO 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 Corp 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 VZO 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 Corp is expected to generate 1.05 times more return on investment than Volkswagen. However, Suzuki is 1.05 times more volatile than Volkswagen AG VZO. It trades about 0.14 of its potential returns per unit of risk. Volkswagen AG VZO is currently generating about -0.33 per unit of risk. If you would invest 3,995 in Suzuki Motor Corp on August 29, 2024 and sell it today you would earn a total of 257.00 from holding Suzuki Motor Corp or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suzuki Motor Corp vs. Volkswagen AG VZO
Performance |
| Timeline |
| Suzuki Motor Corp |
| Volkswagen AG VZO |
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. Isuzu Motors | Suzuki vs. Honda Motor Co | Suzuki vs. Porsche Automobil Holding | Suzuki vs. Mazda Motor Corp |
| Volkswagen vs. Volkswagen AG Pref | Volkswagen vs. Mercedes Benz Group AG | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Honda Motor Co |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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