Correlation Between Volkswagen and Suzuki
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Suzuki 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 Suzuki 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 Suzuki Motor Corp, you can compare the effects of market volatilities on Volkswagen and Suzuki 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 Suzuki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Suzuki.
Diversification Opportunities for Volkswagen and Suzuki
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Volkswagen and Suzuki is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG VZO and Suzuki Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzuki Motor 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 VZO are associated (or correlated) with Suzuki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzuki Motor Corp has no effect on the direction of Volkswagen i.e., Volkswagen and Suzuki go up and down completely randomly.
Pair Corralation between Volkswagen and Suzuki
Assuming the 90 days horizon Volkswagen AG VZO is expected to under-perform the Suzuki. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG VZO is 1.05 times less risky than Suzuki. The pink sheet trades about -0.33 of its potential returns per unit of risk. The Suzuki Motor Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,995 in Suzuki Motor Corp on August 29, 2024 and sell it today you would earn a total of 257.00 from holding Suzuki Motor Corp or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG VZO vs. Suzuki Motor Corp
Performance |
| Timeline |
| Volkswagen AG VZO |
| Suzuki Motor Corp |
Volkswagen and Suzuki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Suzuki
The main advantage of trading using opposite Volkswagen and Suzuki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Suzuki 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 Suzuki will offset losses from the drop in Suzuki's long position.| Volkswagen vs. Volkswagen AG Pref | Volkswagen vs. Mercedes Benz Group AG | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Honda Motor Co |
| Suzuki vs. Isuzu Motors | Suzuki vs. Honda Motor Co | Suzuki vs. Porsche Automobil Holding | Suzuki vs. Mazda Motor Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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