Correlation Between Volkswagen and GreenPower
Can any of the company-specific risk be diversified away by investing in both Volkswagen and GreenPower 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 GreenPower 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 GreenPower Motor, you can compare the effects of market volatilities on Volkswagen and GreenPower 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 GreenPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and GreenPower.
Diversification Opportunities for Volkswagen and GreenPower
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Volkswagen and GreenPower is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Pref and GreenPower Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenPower Motor 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 GreenPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenPower Motor has no effect on the direction of Volkswagen i.e., Volkswagen and GreenPower go up and down completely randomly.
Pair Corralation between Volkswagen and GreenPower
Assuming the 90 days horizon Volkswagen AG Pref is expected to under-perform the GreenPower. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG Pref is 2.43 times less risky than GreenPower. The pink sheet trades about -0.33 of its potential returns per unit of risk. The GreenPower Motor is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 101.00 in GreenPower Motor on August 31, 2024 and sell it today you would earn a total of 0.00 from holding GreenPower Motor or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG Pref vs. GreenPower Motor
Performance |
| Timeline |
| Volkswagen AG Pref |
| GreenPower Motor |
Volkswagen and GreenPower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and GreenPower
The main advantage of trading using opposite Volkswagen and GreenPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, GreenPower 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 GreenPower will offset losses from the drop in GreenPower's long position.| Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Porsche Automobil Holding | Volkswagen vs. Ferrari NV | Volkswagen vs. Bayerische Motoren Werke |
| GreenPower vs. Phoenix Motor Common | GreenPower vs. Envirotech Vehicles | GreenPower vs. Volcon Inc | GreenPower vs. Zapp Electric Vehicles |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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