Correlation Between Volkswagen and INTUITIVE SURGICAL
Can any of the company-specific risk be diversified away by investing in both Volkswagen and INTUITIVE SURGICAL 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 INTUITIVE SURGICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and INTUITIVE SURGICAL, you can compare the effects of market volatilities on Volkswagen and INTUITIVE SURGICAL 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 INTUITIVE SURGICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and INTUITIVE SURGICAL.
Diversification Opportunities for Volkswagen and INTUITIVE SURGICAL
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and INTUITIVE is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL 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 INTUITIVE SURGICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTUITIVE SURGICAL has no effect on the direction of Volkswagen i.e., Volkswagen and INTUITIVE SURGICAL go up and down completely randomly.
Pair Corralation between Volkswagen and INTUITIVE SURGICAL
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the INTUITIVE SURGICAL. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 1.13 times less risky than INTUITIVE SURGICAL. The stock trades about -0.08 of its potential returns per unit of risk. The INTUITIVE SURGICAL is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 29,130 in INTUITIVE SURGICAL on August 27, 2024 and sell it today you would earn a total of 24,250 from holding INTUITIVE SURGICAL or generate 83.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. INTUITIVE SURGICAL
Performance |
| Timeline |
| Volkswagen AG |
| INTUITIVE SURGICAL |
Volkswagen and INTUITIVE SURGICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and INTUITIVE SURGICAL
The main advantage of trading using opposite Volkswagen and INTUITIVE SURGICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, INTUITIVE SURGICAL 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 INTUITIVE SURGICAL will offset losses from the drop in INTUITIVE SURGICAL's long position.The idea behind Volkswagen AG and INTUITIVE SURGICAL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| INTUITIVE SURGICAL vs. PENN NATL GAMING | INTUITIVE SURGICAL vs. GAMING FAC SA | INTUITIVE SURGICAL vs. Xinhua Winshare Publishing | INTUITIVE SURGICAL vs. TSOGO SUN GAMING |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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