Correlation Between Volkswagen and Phoenix
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Phoenix 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 Phoenix 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 Phoenix Motor Common, you can compare the effects of market volatilities on Volkswagen and Phoenix 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 Phoenix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Phoenix.
Diversification Opportunities for Volkswagen and Phoenix
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Volkswagen and Phoenix is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Pref and Phoenix Motor Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix Motor Common 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 Phoenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix Motor Common has no effect on the direction of Volkswagen i.e., Volkswagen and Phoenix go up and down completely randomly.
Pair Corralation between Volkswagen and Phoenix
Assuming the 90 days horizon Volkswagen AG Pref is expected to under-perform the Phoenix. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG Pref is 7.61 times less risky than Phoenix. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Phoenix Motor Common is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 111.00 in Phoenix Motor Common on November 2, 2024 and sell it today you would lose (87.00) from holding Phoenix Motor Common or give up 78.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG Pref vs. Phoenix Motor Common
Performance |
| Timeline |
| Volkswagen AG Pref |
| Phoenix Motor Common |
Volkswagen and Phoenix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Phoenix
The main advantage of trading using opposite Volkswagen and Phoenix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Phoenix 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 Phoenix will offset losses from the drop in Phoenix's long position.| Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Porsche Automobil Holding | Volkswagen vs. Ferrari NV | Volkswagen vs. Porsche Automobile Holding |
| Phoenix vs. GreenPower Motor | Phoenix vs. Envirotech Vehicles | Phoenix vs. Volcon Inc | Phoenix 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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