Correlation Between VOLKSWAGEN and H M
Can any of the company-specific risk be diversified away by investing in both VOLKSWAGEN and H M 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 H M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VOLKSWAGEN AG VZ and H M Hennes, you can compare the effects of market volatilities on VOLKSWAGEN and H M 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 H M. Check out your portfolio center. Please also check ongoing floating volatility patterns of VOLKSWAGEN and H M.
Diversification Opportunities for VOLKSWAGEN and H M
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VOLKSWAGEN and HMSB is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding VOLKSWAGEN AG VZ and H M Hennes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H M Hennes 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 VZ are associated (or correlated) with H M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H M Hennes has no effect on the direction of VOLKSWAGEN i.e., VOLKSWAGEN and H M go up and down completely randomly.
Pair Corralation between VOLKSWAGEN and H M
Assuming the 90 days trading horizon VOLKSWAGEN AG VZ is expected to under-perform the H M. But the stock apears to be less risky and, when comparing its historical volatility, VOLKSWAGEN AG VZ is 3.97 times less risky than H M. The stock trades about -0.32 of its potential returns per unit of risk. The H M Hennes is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,142 in H M Hennes on August 25, 2024 and sell it today you would earn a total of 181.00 from holding H M Hennes or generate 15.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VOLKSWAGEN AG VZ vs. H M Hennes
Performance |
| Timeline |
| VOLKSWAGEN AG VZ |
| H M Hennes |
VOLKSWAGEN and H M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VOLKSWAGEN and H M
The main advantage of trading using opposite VOLKSWAGEN and H M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VOLKSWAGEN position performs unexpectedly, H M 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 H M will offset losses from the drop in H M's long position.| VOLKSWAGEN vs. Tesla Inc | VOLKSWAGEN vs. BYD Company Limited | VOLKSWAGEN vs. Superior Plus Corp | VOLKSWAGEN vs. NMI Holdings |
| H M vs. Khiron Life Sciences | H M vs. Plastic Omnium | H M vs. NEWELL RUBBERMAID | H M vs. BlueScope Steel 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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