Correlation Between Volkswagen and Lion One
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By analyzing existing cross correlation between Volkswagen AG VZO and Lion One Metals, you can compare the effects of market volatilities on Volkswagen and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Lion One.
Diversification Opportunities for Volkswagen and Lion One
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Volkswagen and Lion is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG VZO and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 VZO are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Volkswagen i.e., Volkswagen and Lion One go up and down completely randomly.
Pair Corralation between Volkswagen and Lion One
Assuming the 90 days trading horizon Volkswagen AG VZO is expected to under-perform the Lion One. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG VZO is 2.65 times less risky than Lion One. The stock trades about -0.3 of its potential returns per unit of risk. The Lion One Metals is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Lion One Metals on September 1, 2024 and sell it today you would lose (1.00) from holding Lion One Metals or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Volkswagen AG VZO vs. Lion One Metals
Performance |
| Timeline |
| Volkswagen AG VZO |
| Lion One Metals |
Volkswagen and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Lion One
The main advantage of trading using opposite Volkswagen and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.The idea behind Volkswagen AG VZO and Lion One Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lion One vs. NIPPON STEEL SPADR | Lion One vs. United States Steel | Lion One vs. Nippon Steel | Lion One vs. Singapore Telecommunications Limited |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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