Correlation Between Volkswagen and Aston Martin
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Aston Martin 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 Aston Martin 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 Aston Martin Lagonda, you can compare the effects of market volatilities on Volkswagen and Aston Martin 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 Aston Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Aston Martin.
Diversification Opportunities for Volkswagen and Aston Martin
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Volkswagen and Aston is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG VZO and Aston Martin Lagonda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Martin Lagonda 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 Aston Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Martin Lagonda has no effect on the direction of Volkswagen i.e., Volkswagen and Aston Martin go up and down completely randomly.
Pair Corralation between Volkswagen and Aston Martin
Assuming the 90 days horizon Volkswagen AG VZO is expected to generate 0.77 times more return on investment than Aston Martin. However, Volkswagen AG VZO is 1.3 times less risky than Aston Martin. It trades about 0.01 of its potential returns per unit of risk. Aston Martin Lagonda is currently generating about -0.01 per unit of risk. If you would invest 10,377 in Volkswagen AG VZO on November 2, 2024 and sell it today you would lose (522.00) from holding Volkswagen AG VZO or give up 5.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Volkswagen AG VZO vs. Aston Martin Lagonda
Performance |
| Timeline |
| Volkswagen AG VZO |
| Aston Martin Lagonda |
Volkswagen and Aston Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Aston Martin
The main advantage of trading using opposite Volkswagen and Aston Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Aston Martin 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 Aston Martin will offset losses from the drop in Aston Martin's long position.| Volkswagen vs. Volkswagen AG Pref | Volkswagen vs. Mercedes Benz Group AG | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Honda Motor Co |
| Aston Martin vs. Geely Automobile Holdings | Aston Martin vs. Guangzhou Automobile Group | Aston Martin vs. Dowlais Group plc | Aston Martin vs. NFI Group |
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 CEOs Directory module to screen CEOs from public companies around the world.
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