Correlation Between Volkswagen and Rockdale Resources
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Rockdale Resources 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 Rockdale Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Rockdale Resources Corp, you can compare the effects of market volatilities on Volkswagen and Rockdale Resources 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 Rockdale Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Rockdale Resources.
Diversification Opportunities for Volkswagen and Rockdale Resources
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Volkswagen and Rockdale is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Rockdale Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockdale Resources Corp 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 Rockdale Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockdale Resources Corp has no effect on the direction of Volkswagen i.e., Volkswagen and Rockdale Resources go up and down completely randomly.
Pair Corralation between Volkswagen and Rockdale Resources
Assuming the 90 days horizon Volkswagen AG is expected to generate 0.22 times more return on investment than Rockdale Resources. However, Volkswagen AG is 4.56 times less risky than Rockdale Resources. It trades about -0.16 of its potential returns per unit of risk. Rockdale Resources Corp is currently generating about -0.1 per unit of risk. If you would invest 13,901 in Volkswagen AG on September 1, 2024 and sell it today you would lose (5,201) from holding Volkswagen AG or give up 37.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 78.57% |
| Values | Daily Returns |
Volkswagen AG vs. Rockdale Resources Corp
Performance |
| Timeline |
| Volkswagen AG |
| Rockdale Resources Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Volkswagen and Rockdale Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Rockdale Resources
The main advantage of trading using opposite Volkswagen and Rockdale Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Rockdale Resources 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 Rockdale Resources will offset losses from the drop in Rockdale Resources' long position.| Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Stellantis NV | Volkswagen vs. Toyota Motor | Volkswagen vs. Honda Motor Co |
| Rockdale Resources vs. AER Energy Resources | Rockdale Resources vs. Altura Energy | Rockdale Resources vs. Alamo Energy Corp | Rockdale Resources vs. Arete Industries |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |