Correlation Between Volkswagen and Hays Plc
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Hays Plc 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 Hays Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Hays plc, you can compare the effects of market volatilities on Volkswagen and Hays Plc 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 Hays Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Hays Plc.
Diversification Opportunities for Volkswagen and Hays Plc
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Volkswagen and Hays is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Hays plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hays plc 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 Hays Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hays plc has no effect on the direction of Volkswagen i.e., Volkswagen and Hays Plc go up and down completely randomly.
Pair Corralation between Volkswagen and Hays Plc
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the Hays Plc. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 3.3 times less risky than Hays Plc. The stock trades about -0.38 of its potential returns per unit of risk. The Hays plc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 96.00 in Hays plc on September 2, 2024 and sell it today you would lose (2.00) from holding Hays plc or give up 2.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. Hays plc
Performance |
| Timeline |
| Volkswagen AG |
| Hays plc |
Volkswagen and Hays Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Hays Plc
The main advantage of trading using opposite Volkswagen and Hays Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Hays Plc 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 Hays Plc will offset losses from the drop in Hays Plc's long position.| Volkswagen vs. SIVERS SEMICONDUCTORS AB | Volkswagen vs. Darden Restaurants | Volkswagen vs. Reliance Steel Aluminum | Volkswagen vs. Q2M Managementberatung AG |
| Hays Plc vs. National Bank Holdings | Hays Plc vs. SEI INVESTMENTS | Hays Plc vs. EAT WELL INVESTMENT | Hays Plc vs. SLR Investment 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 Stocks Directory module to find actively traded stocks across global markets.
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