Correlation Between Volkswagen and Carlson Investments

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

By analyzing existing cross correlation between Volkswagen AG Non Vtg and Carlson Investments SA, you can compare the effects of market volatilities on Volkswagen and Carlson Investments 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 Carlson Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Carlson Investments.

Diversification Opportunities for Volkswagen and Carlson Investments

0.59

Correlation Coefficient

Volkswagen  Carlson Investments

Very weak diversification

The 3 months correlation between Volkswagen and Carlson is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG Non Vtg and Carlson Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlson Investments 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 Non Vtg are associated (or correlated) with Carlson Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlson Investments has no effect on the direction of Volkswagen i.e., Volkswagen and Carlson Investments go up and down completely randomly.

Pair Corralation between Volkswagen and Carlson Investments

Assuming the 90 days trading horizon Volkswagen AG Non Vtg is expected to generate 0.48 times more return on investment than Carlson Investments. However, Volkswagen AG Non Vtg is 2.06 times less risky than Carlson Investments. It trades about -0.07 of its potential returns per unit of risk. Carlson Investments SA is currently generating about -0.1 per unit of risk. If you would invest  39,960  in Volkswagen AG Non Vtg on September 13, 2024 and sell it today you would lose (3,260) from holding Volkswagen AG Non Vtg or give up 8.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Volkswagen AG Non Vtg  vs.  Carlson Investments SA

Volkswagen AG Non

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG Non Vtg has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Carlson Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlson Investments SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Volkswagen and Carlson Investments

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

The idea behind Volkswagen AG Non Vtg and Carlson Investments SA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.