Correlation Between Volkswagen and Ameriguard Security

Can any of the company-specific risk be diversified away by investing in both Volkswagen and Ameriguard Security 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 Ameriguard Security into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Volkswagen AG VZO and Ameriguard Security Services, you can compare the effects of market volatilities on Volkswagen and Ameriguard Security 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 Ameriguard Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Ameriguard Security.

Diversification Opportunities for Volkswagen and Ameriguard Security

0.8

Correlation Coefficient

Volkswagen  Ameriguard Security

Very poor diversification

The 3 months correlation between Volkswagen and Ameriguard is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG VZO and Ameriguard Security Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriguard Security 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 VZO are associated (or correlated) with Ameriguard Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriguard Security has no effect on the direction of Volkswagen i.e., Volkswagen and Ameriguard Security go up and down completely randomly.

Pair Corralation between Volkswagen and Ameriguard Security

Assuming the 90 days horizon Volkswagen AG VZO is expected to under-perform the Ameriguard Security. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG VZO is 9.51 times less risky than Ameriguard Security. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Ameriguard Security Services is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Ameriguard Security Services on September 14, 2024 and sell it today you would lose (9.00) from holding Ameriguard Security Services or give up 45.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Volkswagen AG VZO  vs.  Ameriguard Security Services

Volkswagen AG VZO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG VZO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Ameriguard Security

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriguard Security Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ameriguard Security unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Volkswagen and Ameriguard Security

The main advantage of trading using opposite Volkswagen and Ameriguard Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Ameriguard Security 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 Ameriguard Security will offset losses from the drop in Ameriguard Security's long position.

The idea behind Volkswagen AG VZO and Ameriguard Security Services pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.