Correlation Between Volkswagen and Intel
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Intel 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 Intel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Intel, you can compare the effects of market volatilities on Volkswagen and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Intel.
Diversification Opportunities for Volkswagen and Intel
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Volkswagen and Intel is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Volkswagen i.e., Volkswagen and Intel go up and down completely randomly.
Pair Corralation between Volkswagen and Intel
Assuming the 90 days trading horizon Volkswagen is expected to generate 1.6 times less return on investment than Intel. But when comparing it to its historical volatility, Volkswagen AG is 1.99 times less risky than Intel. It trades about 0.35 of its potential returns per unit of risk. Intel is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,822 in Intel on October 21, 2024 and sell it today you would earn a total of 248.00 from holding Intel or generate 13.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Volkswagen AG vs. Intel
Performance |
Timeline |
Volkswagen AG |
Intel |
Volkswagen and Intel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Volkswagen and Intel
The main advantage of trading using opposite Volkswagen and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.Volkswagen vs. NetSol Technologies | Volkswagen vs. PKSHA TECHNOLOGY INC | Volkswagen vs. Host Hotels Resorts | Volkswagen vs. Amkor Technology |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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