Correlation Between Volkswagen and AMP
Can any of the company-specific risk be diversified away by investing in both Volkswagen and AMP 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 AMP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG VZO and AMP, you can compare the effects of market volatilities on Volkswagen and AMP 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 AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and AMP.
Diversification Opportunities for Volkswagen and AMP
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Volkswagen and AMP is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG VZO and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP 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 VZO are associated (or correlated) with AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of Volkswagen i.e., Volkswagen and AMP go up and down completely randomly.
Pair Corralation between Volkswagen and AMP
Assuming the 90 days horizon Volkswagen AG VZO is expected to generate 0.94 times more return on investment than AMP. However, Volkswagen AG VZO is 1.06 times less risky than AMP. It trades about -0.01 of its potential returns per unit of risk. AMP is currently generating about -0.02 per unit of risk. If you would invest 10,802 in Volkswagen AG VZO on September 3, 2024 and sell it today you would lose (2,427) from holding Volkswagen AG VZO or give up 22.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 59.47% |
| Values | Daily Returns |
Volkswagen AG VZO vs. AMP
Performance |
| Timeline |
| Volkswagen AG VZO |
| AMP |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Volkswagen and AMP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and AMP
The main advantage of trading using opposite Volkswagen and AMP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, AMP 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 AMP will offset losses from the drop in AMP's long position.| Volkswagen vs. Porsche Automobil Holding | Volkswagen vs. Porsche Automobile Holding | Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Bayerische Motoren Werke |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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