Correlation Between Volkswagen and China Xuefeng
Can any of the company-specific risk be diversified away by investing in both Volkswagen and China Xuefeng 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 China Xuefeng 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 China Xuefeng Environmental, you can compare the effects of market volatilities on Volkswagen and China Xuefeng 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 China Xuefeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and China Xuefeng.
Diversification Opportunities for Volkswagen and China Xuefeng
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Volkswagen and China is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG VZO and China Xuefeng Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Xuefeng Enviro 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 China Xuefeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Xuefeng Enviro has no effect on the direction of Volkswagen i.e., Volkswagen and China Xuefeng go up and down completely randomly.
Pair Corralation between Volkswagen and China Xuefeng
Assuming the 90 days horizon Volkswagen is expected to generate 104.4 times less return on investment than China Xuefeng. But when comparing it to its historical volatility, Volkswagen AG VZO is 9.88 times less risky than China Xuefeng. It trades about 0.01 of its potential returns per unit of risk. China Xuefeng Environmental is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 9.00 in China Xuefeng Environmental on November 2, 2024 and sell it today you would lose (7.20) from holding China Xuefeng Environmental or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Volkswagen AG VZO vs. China Xuefeng Environmental
Performance |
| Timeline |
| Volkswagen AG VZO |
| China Xuefeng Enviro |
Volkswagen and China Xuefeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and China Xuefeng
The main advantage of trading using opposite Volkswagen and China Xuefeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, China Xuefeng 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 China Xuefeng will offset losses from the drop in China Xuefeng's long position.| Volkswagen vs. Volkswagen AG Pref | Volkswagen vs. Mercedes Benz Group AG | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Honda Motor Co |
| China Xuefeng vs. Vaporbrands Intl | China Xuefeng vs. Faraday Future Intelligent | China Xuefeng vs. Aston Martin Lagonda | China Xuefeng vs. Polestar Automotive Holding |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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