Correlation Between Volkswagen and Harmonic
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Harmonic 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 Harmonic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Harmonic, you can compare the effects of market volatilities on Volkswagen and Harmonic 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 Harmonic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Harmonic.
Diversification Opportunities for Volkswagen and Harmonic
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Volkswagen and Harmonic is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Harmonic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmonic 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 Harmonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmonic has no effect on the direction of Volkswagen i.e., Volkswagen and Harmonic go up and down completely randomly.
Pair Corralation between Volkswagen and Harmonic
Assuming the 90 days horizon Volkswagen AG is expected to under-perform the Harmonic. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 1.25 times less risky than Harmonic. The pink sheet trades about -0.37 of its potential returns per unit of risk. The Harmonic is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,158 in Harmonic on August 31, 2024 and sell it today you would earn a total of 98.00 from holding Harmonic or generate 8.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. Harmonic
Performance |
| Timeline |
| Volkswagen AG |
| Harmonic |
Volkswagen and Harmonic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Harmonic
The main advantage of trading using opposite Volkswagen and Harmonic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Harmonic 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 Harmonic will offset losses from the drop in Harmonic's long position.| Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Stellantis NV | Volkswagen vs. Toyota Motor | Volkswagen vs. Honda Motor Co |
| Harmonic vs. NETGEAR | Harmonic vs. Juniper Networks | Harmonic vs. Digi International | Harmonic vs. Clearfield |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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