Correlation Between Volkswagen and Rolls Royce
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Rolls Royce 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 Rolls Royce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Rolls Royce Holdings plc, you can compare the effects of market volatilities on Volkswagen and Rolls Royce 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 Rolls Royce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Rolls Royce.
Diversification Opportunities for Volkswagen and Rolls Royce
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and Rolls is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Rolls Royce Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rolls Royce Holdings 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 Rolls Royce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rolls Royce Holdings has no effect on the direction of Volkswagen i.e., Volkswagen and Rolls Royce go up and down completely randomly.
Pair Corralation between Volkswagen and Rolls Royce
If you would invest (100.00) in Rolls Royce Holdings plc on August 24, 2024 and sell it today you would earn a total of 100.00 from holding Rolls Royce Holdings plc or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Volkswagen AG vs. Rolls Royce Holdings plc
Performance |
| Timeline |
| Volkswagen AG |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Rolls Royce Holdings |
Volkswagen and Rolls Royce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Rolls Royce
The main advantage of trading using opposite Volkswagen and Rolls Royce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Rolls Royce 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 Rolls Royce will offset losses from the drop in Rolls Royce's long position.| Volkswagen vs. National Health Investors | Volkswagen vs. Bumrungrad Hospital Public | Volkswagen vs. SWISS WATER DECAFFCOFFEE | Volkswagen vs. BW OFFSHORE LTD |
| Rolls Royce vs. Nucletron Electronic Aktiengesellschaft | Rolls Royce vs. Microchip Technology Incorporated | Rolls Royce vs. Micron Technology | Rolls Royce vs. KIMBALL ELECTRONICS |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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