Correlation Between Volkswagen and SoftBank Group
Can any of the company-specific risk be diversified away by investing in both Volkswagen and SoftBank Group 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 SoftBank Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and SoftBank Group Corp, you can compare the effects of market volatilities on Volkswagen and SoftBank Group 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 SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and SoftBank Group.
Diversification Opportunities for Volkswagen and SoftBank Group
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Volkswagen and SoftBank is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp 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 SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of Volkswagen i.e., Volkswagen and SoftBank Group go up and down completely randomly.
Pair Corralation between Volkswagen and SoftBank Group
Assuming the 90 days horizon Volkswagen AG is expected to under-perform the SoftBank Group. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 4.24 times less risky than SoftBank Group. The stock trades about -0.05 of its potential returns per unit of risk. The SoftBank Group Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 697.00 in SoftBank Group Corp on August 30, 2024 and sell it today you would earn a total of 4,863 from holding SoftBank Group Corp or generate 697.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Volkswagen AG vs. SoftBank Group Corp
Performance |
| Timeline |
| Volkswagen AG |
| SoftBank Group Corp |
Volkswagen and SoftBank Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and SoftBank Group
The main advantage of trading using opposite Volkswagen and SoftBank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, SoftBank Group 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 SoftBank Group will offset losses from the drop in SoftBank Group's long position.| Volkswagen vs. Tesla Inc | Volkswagen vs. Toyota Motor | Volkswagen vs. Toyota Motor | Volkswagen vs. BYD Company Limited |
| SoftBank Group vs. Tencent Holdings | SoftBank Group vs. BYD Company Limited | SoftBank Group vs. Geely Automobile Holdings | SoftBank Group vs. Baidu Inc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |