Correlation Between Volkswagen and First Hydrogen
Can any of the company-specific risk be diversified away by investing in both Volkswagen and First Hydrogen 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 First Hydrogen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG Pref and First Hydrogen Corp, you can compare the effects of market volatilities on Volkswagen and First Hydrogen 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 First Hydrogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and First Hydrogen.
Diversification Opportunities for Volkswagen and First Hydrogen
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Volkswagen and First is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Pref and First Hydrogen Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hydrogen Corp 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 Pref are associated (or correlated) with First Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hydrogen Corp has no effect on the direction of Volkswagen i.e., Volkswagen and First Hydrogen go up and down completely randomly.
Pair Corralation between Volkswagen and First Hydrogen
Assuming the 90 days horizon Volkswagen AG Pref is expected to generate 0.39 times more return on investment than First Hydrogen. However, Volkswagen AG Pref is 2.54 times less risky than First Hydrogen. It trades about -0.33 of its potential returns per unit of risk. First Hydrogen Corp is currently generating about -0.24 per unit of risk. If you would invest 969.00 in Volkswagen AG Pref on August 31, 2024 and sell it today you would lose (125.00) from holding Volkswagen AG Pref or give up 12.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG Pref vs. First Hydrogen Corp
Performance |
| Timeline |
| Volkswagen AG Pref |
| First Hydrogen Corp |
Volkswagen and First Hydrogen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and First Hydrogen
The main advantage of trading using opposite Volkswagen and First Hydrogen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, First Hydrogen 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 First Hydrogen will offset losses from the drop in First Hydrogen's long position.| Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Porsche Automobil Holding | Volkswagen vs. Ferrari NV | Volkswagen vs. Bayerische Motoren Werke |
| First Hydrogen vs. BAIC Motor | First Hydrogen vs. Zapp Electric Vehicles | First Hydrogen vs. Guangzhou Automobile Group | First Hydrogen vs. Phoenix Motor Common |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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