Correlation Between Volkswagen and ROMERIKE SPAREBANK

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

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

Diversification Opportunities for Volkswagen and ROMERIKE SPAREBANK

-0.65

Correlation Coefficient

Volkswagen  ROMERIKE SPAREBANK

Excellent diversification

The 3 months correlation between Volkswagen and ROMERIKE is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and ROMERIKE SPAREBANK NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROMERIKE SPAREBANK has no effect on the direction of Volkswagen i.e., Volkswagen and ROMERIKE SPAREBANK go up and down completely randomly.

Pair Corralation between Volkswagen and ROMERIKE SPAREBANK

Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the ROMERIKE SPAREBANK. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 18.97 times less risky than ROMERIKE SPAREBANK. The stock trades about -0.01 of its potential returns per unit of risk. The ROMERIKE SPAREBANK NK is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,157  in ROMERIKE SPAREBANK NK on September 20, 2024 and sell it today you would lose (96.00) from holding ROMERIKE SPAREBANK NK or give up 8.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Volkswagen AG  vs.  ROMERIKE SPAREBANK NK

Volkswagen AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Volkswagen is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ROMERIKE SPAREBANK

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ROMERIKE SPAREBANK NK are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ROMERIKE SPAREBANK is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Volkswagen and ROMERIKE SPAREBANK

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

The idea behind Volkswagen AG and ROMERIKE SPAREBANK NK 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.