Correlation Between Volkswagen and FS Energy
Can any of the company-specific risk be diversified away by investing in both Volkswagen and FS Energy 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 FS Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG 110 and FS Energy and, you can compare the effects of market volatilities on Volkswagen and FS Energy 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 FS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and FS Energy.
Diversification Opportunities for Volkswagen and FS Energy
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Volkswagen and FSEN is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG 110 and FS Energy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS Energy 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 110 are associated (or correlated) with FS Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS Energy has no effect on the direction of Volkswagen i.e., Volkswagen and FS Energy go up and down completely randomly.
Pair Corralation between Volkswagen and FS Energy
Assuming the 90 days horizon Volkswagen AG 110 is expected to under-perform the FS Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG 110 is 5.33 times less risky than FS Energy. The pink sheet trades about -0.26 of its potential returns per unit of risk. The FS Energy and is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 250.00 in FS Energy and on September 2, 2024 and sell it today you would earn a total of 0.00 from holding FS Energy and or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG 110 vs. FS Energy and
Performance |
| Timeline |
| Volkswagen AG 110 |
| FS Energy |
Volkswagen and FS Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and FS Energy
The main advantage of trading using opposite Volkswagen and FS Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, FS Energy 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 FS Energy will offset losses from the drop in FS Energy's long position.| Volkswagen vs. Porsche Automobile Holding | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Volkswagen AG | Volkswagen vs. Mercedes Benz Group AG |
| FS Energy vs. Blackhawk Growth Corp | FS Energy vs. Guardian Capital Group | FS Energy vs. Flow Capital Corp | FS Energy vs. Princeton Capital |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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