Correlation Between Uber Technologies and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Uber Technologies 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 Uber Technologies and Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Volkswagen AG, you can compare the effects of market volatilities on Uber Technologies 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 Uber Technologies with a short position of Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Volkswagen.
Diversification Opportunities for Uber Technologies and Volkswagen
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Uber and Volkswagen is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Volkswagen go up and down completely randomly.
Pair Corralation between Uber Technologies and Volkswagen
Assuming the 90 days trading horizon Uber Technologies is expected to generate 1.6 times more return on investment than Volkswagen. However, Uber Technologies is 1.6 times more volatile than Volkswagen AG. It trades about -0.02 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.1 per unit of risk. If you would invest 6,552 in Uber Technologies on September 29, 2024 and sell it today you would lose (722.00) from holding Uber Technologies or give up 11.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uber Technologies vs. Volkswagen AG
Performance |
| Timeline |
| Uber Technologies |
| Volkswagen AG |
Uber Technologies and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uber Technologies and Volkswagen
The main advantage of trading using opposite Uber Technologies and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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.| Uber Technologies vs. Apple Inc | Uber Technologies vs. Apple Inc | Uber Technologies vs. Apple Inc | Uber Technologies vs. Apple Inc |
| Volkswagen vs. BYD Company Limited | Volkswagen vs. MERCEDES BENZ GRP ADR14 | Volkswagen vs. VOLKSWAGEN ADR 110ON | Volkswagen vs. Volkswagen 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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