Correlation Between Volkswagen and VF
Can any of the company-specific risk be diversified away by investing in both Volkswagen and VF 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 VF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and VF Corporation, you can compare the effects of market volatilities on Volkswagen and VF 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 VF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and VF.
Diversification Opportunities for Volkswagen and VF
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Volkswagen and VF is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and VF Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corporation 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 VF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corporation has no effect on the direction of Volkswagen i.e., Volkswagen and VF go up and down completely randomly.
Pair Corralation between Volkswagen and VF
Assuming the 90 days horizon Volkswagen AG is expected to under-perform the VF. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 2.49 times less risky than VF. The stock trades about -0.06 of its potential returns per unit of risk. The VF Corporation is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,655 in VF Corporation on August 25, 2024 and sell it today you would earn a total of 83.00 from holding VF Corporation or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. VF Corp.
Performance |
| Timeline |
| Volkswagen AG |
| VF Corporation |
Volkswagen and VF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and VF
The main advantage of trading using opposite Volkswagen and VF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, VF 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 VF will offset losses from the drop in VF's long position.| Volkswagen vs. AUSNUTRIA DAIRY | Volkswagen vs. CITY OFFICE REIT | Volkswagen vs. MAVEN WIRELESS SWEDEN | Volkswagen vs. TreeHouse Foods |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |