Correlation Between Volkswagen and Nasdaq
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Nasdaq 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 Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Nasdaq Inc, you can compare the effects of market volatilities on Volkswagen and Nasdaq 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 Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Nasdaq.
Diversification Opportunities for Volkswagen and Nasdaq
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and Nasdaq is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc 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 are associated (or correlated) with Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of Volkswagen i.e., Volkswagen and Nasdaq go up and down completely randomly.
Pair Corralation between Volkswagen and Nasdaq
Assuming the 90 days horizon Volkswagen AG is expected to under-perform the Nasdaq. In addition to that, Volkswagen is 1.37 times more volatile than Nasdaq Inc. It trades about -0.08 of its total potential returns per unit of risk. Nasdaq Inc is currently generating about 0.22 per unit of volatility. If you would invest 6,493 in Nasdaq Inc on September 18, 2024 and sell it today you would earn a total of 1,178 from holding Nasdaq Inc or generate 18.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Volkswagen AG vs. Nasdaq Inc
Performance |
Timeline |
Volkswagen AG |
Nasdaq Inc |
Volkswagen and Nasdaq Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Volkswagen and Nasdaq
The main advantage of trading using opposite Volkswagen and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Nasdaq 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 Nasdaq will offset losses from the drop in Nasdaq's long position.Volkswagen vs. 24SEVENOFFICE GROUP AB | Volkswagen vs. ALERION CLEANPOWER | Volkswagen vs. MAVEN WIRELESS SWEDEN | Volkswagen vs. UMC Electronics Co |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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