Correlation Between Volkswagen and Star Jets
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Star Jets 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 Star Jets 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 Star Jets International, you can compare the effects of market volatilities on Volkswagen and Star Jets 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 Star Jets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Star Jets.
Diversification Opportunities for Volkswagen and Star Jets
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Volkswagen and Star is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Pref and Star Jets International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Jets International 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 Star Jets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Jets International has no effect on the direction of Volkswagen i.e., Volkswagen and Star Jets go up and down completely randomly.
Pair Corralation between Volkswagen and Star Jets
Assuming the 90 days horizon Volkswagen AG Pref is expected to under-perform the Star Jets. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG Pref is 18.85 times less risky than Star Jets. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Star Jets International is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 0.82 in Star Jets International on September 12, 2024 and sell it today you would earn a total of 0.86 from holding Star Jets International or generate 104.88% 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 Pref vs. Star Jets International
Performance |
| Timeline |
| Volkswagen AG Pref |
| Star Jets International |
Volkswagen and Star Jets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Star Jets
The main advantage of trading using opposite Volkswagen and Star Jets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Star Jets 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 Star Jets will offset losses from the drop in Star Jets' long position.| Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Porsche Automobil Holding | Volkswagen vs. Ferrari NV | Volkswagen vs. Bayerische Motoren Werke |
| Star Jets vs. Aeroports de Paris | Star Jets vs. Aena SME SA | Star Jets vs. Aena SME SA | Star Jets vs. Airports of Thailand |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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