Correlation Between Volkswagen and Sofina Société
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Sofina Société 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 Sofina Société 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 Sofina Socit Anonyme, you can compare the effects of market volatilities on Volkswagen and Sofina Société 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 Sofina Société. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Sofina Société.
Diversification Opportunities for Volkswagen and Sofina Société
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Volkswagen and Sofina is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Pref and Sofina Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sofina Socit Anonyme 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 Sofina Société. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sofina Socit Anonyme has no effect on the direction of Volkswagen i.e., Volkswagen and Sofina Société go up and down completely randomly.
Pair Corralation between Volkswagen and Sofina Société
Assuming the 90 days horizon Volkswagen AG Pref is expected to under-perform the Sofina Société. In addition to that, Volkswagen is 18.08 times more volatile than Sofina Socit Anonyme. It trades about -0.28 of its total potential returns per unit of risk. Sofina Socit Anonyme is currently generating about -0.22 per unit of volatility. If you would invest 23,000 in Sofina Socit Anonyme on September 2, 2024 and sell it today you would lose (110.00) from holding Sofina Socit Anonyme or give up 0.48% 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. Sofina Socit Anonyme
Performance |
| Timeline |
| Volkswagen AG Pref |
| Sofina Socit Anonyme |
Volkswagen and Sofina Société Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Sofina Société
The main advantage of trading using opposite Volkswagen and Sofina Société positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Sofina Société 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 Sofina Société will offset losses from the drop in Sofina Société's long position.| Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Porsche Automobil Holding | Volkswagen vs. Ferrari NV | Volkswagen vs. Bayerische Motoren Werke |
| Sofina Société vs. Marygold Companies | Sofina Société vs. Carbon Streaming Corp | Sofina Société vs. Arrowmark Financial Corp | Sofina Société vs. Patria Investments |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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