Correlation Between Volkswagen and Life Electric
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Life Electric 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 Life Electric 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 Life Electric Vehicles, you can compare the effects of market volatilities on Volkswagen and Life Electric 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 Life Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Life Electric.
Diversification Opportunities for Volkswagen and Life Electric
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Volkswagen and Life is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG 110 and Life Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Electric Vehicles 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 Life Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Electric Vehicles has no effect on the direction of Volkswagen i.e., Volkswagen and Life Electric go up and down completely randomly.
Pair Corralation between Volkswagen and Life Electric
Assuming the 90 days horizon Volkswagen AG 110 is expected to generate 0.17 times more return on investment than Life Electric. However, Volkswagen AG 110 is 5.78 times less risky than Life Electric. It trades about -0.26 of its potential returns per unit of risk. Life Electric Vehicles is currently generating about -0.08 per unit of risk. If you would invest 981.00 in Volkswagen AG 110 on September 2, 2024 and sell it today you would lose (106.00) from holding Volkswagen AG 110 or give up 10.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG 110 vs. Life Electric Vehicles
Performance |
| Timeline |
| Volkswagen AG 110 |
| Life Electric Vehicles |
Volkswagen and Life Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Life Electric
The main advantage of trading using opposite Volkswagen and Life Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Life Electric 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 Life Electric will offset losses from the drop in Life Electric's long position.| Volkswagen vs. Porsche Automobile Holding | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Volkswagen AG | Volkswagen vs. Mercedes Benz Group AG |
| Life Electric vs. Volkswagen AG 110 | Life Electric vs. Stellantis NV | Life Electric vs. Toyota Motor | Life Electric vs. Honda Motor Co |
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.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Stocks Directory Find actively traded stocks across global markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |