Correlation Between Volkswagen and Liechtensteinische
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Liechtensteinische 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 Liechtensteinische into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Liechtensteinische Landesbank Aktiengesellschaft, you can compare the effects of market volatilities on Volkswagen and Liechtensteinische 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 Liechtensteinische. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Liechtensteinische.
Diversification Opportunities for Volkswagen and Liechtensteinische
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Volkswagen and Liechtensteinische is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Liechtensteinische Landesbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liechtensteinische 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 Liechtensteinische. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liechtensteinische has no effect on the direction of Volkswagen i.e., Volkswagen and Liechtensteinische go up and down completely randomly.
Pair Corralation between Volkswagen and Liechtensteinische
Assuming the 90 days trading horizon Volkswagen AG is expected to generate 0.87 times more return on investment than Liechtensteinische. However, Volkswagen AG is 1.15 times less risky than Liechtensteinische. It trades about 0.22 of its potential returns per unit of risk. Liechtensteinische Landesbank Aktiengesellschaft is currently generating about 0.01 per unit of risk. If you would invest 8,288 in Volkswagen AG on September 15, 2024 and sell it today you would earn a total of 408.00 from holding Volkswagen AG or generate 4.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. Liechtensteinische Landesbank
Performance |
| Timeline |
| Volkswagen AG |
| Liechtensteinische |
Volkswagen and Liechtensteinische Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Liechtensteinische
The main advantage of trading using opposite Volkswagen and Liechtensteinische positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Liechtensteinische 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 Liechtensteinische will offset losses from the drop in Liechtensteinische's long position.| Volkswagen vs. BYD Company Limited | Volkswagen vs. MERCEDES BENZ GRP ADR14 | Volkswagen vs. Superior Plus Corp | Volkswagen vs. SIVERS SEMICONDUCTORS AB |
| Liechtensteinische vs. SALESFORCE INC CDR | Liechtensteinische vs. MAGNUM MINING EXP | Liechtensteinische vs. PACIFIC ONLINE | Liechtensteinische vs. Gruppo Mutuionline SpA |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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