Correlation Between Volkswagen and Swiss Re
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Swiss Re 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 Swiss Re into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Swiss Re AG, you can compare the effects of market volatilities on Volkswagen and Swiss Re 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 Swiss Re. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Swiss Re.
Diversification Opportunities for Volkswagen and Swiss Re
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Volkswagen and Swiss is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Swiss Re AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Re AG 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 Swiss Re. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Re AG has no effect on the direction of Volkswagen i.e., Volkswagen and Swiss Re go up and down completely randomly.
Pair Corralation between Volkswagen and Swiss Re
Assuming the 90 days trading horizon Volkswagen AG is expected to generate 0.66 times more return on investment than Swiss Re. However, Volkswagen AG is 1.51 times less risky than Swiss Re. It trades about 0.24 of its potential returns per unit of risk. Swiss Re AG is currently generating about 0.08 per unit of risk. If you would invest 8,410 in Volkswagen AG on October 26, 2024 and sell it today you would earn a total of 1,190 from holding Volkswagen AG or generate 14.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. Swiss Re AG
Performance |
| Timeline |
| Volkswagen AG |
| Swiss Re AG |
Volkswagen and Swiss Re Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Swiss Re
The main advantage of trading using opposite Volkswagen and Swiss Re positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Swiss Re 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 Swiss Re will offset losses from the drop in Swiss Re's long position.| Volkswagen vs. New Residential Investment | Volkswagen vs. ALBIS LEASING AG | Volkswagen vs. Scottish Mortgage Investment | Volkswagen vs. HK Electric Investments |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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