Correlation Between Volkswagen and AudioCodes
Can any of the company-specific risk be diversified away by investing in both Volkswagen and AudioCodes 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 Volkswagen and AudioCodes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and AudioCodes, you can compare the effects of market volatilities on Volkswagen and AudioCodes 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 Volkswagen with a short position of AudioCodes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and AudioCodes.
Diversification Opportunities for Volkswagen and AudioCodes
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Volkswagen and AudioCodes is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and AudioCodes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioCodes and Volkswagen 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 Volkswagen AG are associated (or correlated) with AudioCodes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AudioCodes has no effect on the direction of Volkswagen i.e., Volkswagen and AudioCodes go up and down completely randomly.
Pair Corralation between Volkswagen and AudioCodes
Assuming the 90 days horizon Volkswagen AG is expected to under-perform the AudioCodes. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 1.46 times less risky than AudioCodes. The pink sheet trades about -0.04 of its potential returns per unit of risk. The AudioCodes is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,684 in AudioCodes on August 28, 2024 and sell it today you would lose (754.00) from holding AudioCodes or give up 44.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. AudioCodes
Performance |
| Timeline |
| Volkswagen AG |
| AudioCodes |
Volkswagen and AudioCodes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and AudioCodes
The main advantage of trading using opposite Volkswagen and AudioCodes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, AudioCodes 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 AudioCodes will offset losses from the drop in AudioCodes' long position.| Volkswagen vs. Isuzu Motors | Volkswagen vs. Renault SA | Volkswagen vs. Toyota Motor Corp | Volkswagen vs. Porsche Automobile Holding |
| AudioCodes vs. Aviat Networks | AudioCodes vs. Silicom | AudioCodes vs. Akoustis Technologies | AudioCodes vs. Gilat Satellite Networks |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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