Correlation Between Abercrombie Fitch and Polestar Automotive
Can any of the company-specific risk be diversified away by investing in both Abercrombie Fitch and Polestar Automotive 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 Abercrombie Fitch and Polestar Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abercrombie Fitch and Polestar Automotive Holding, you can compare the effects of market volatilities on Abercrombie Fitch and Polestar Automotive 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 Abercrombie Fitch with a short position of Polestar Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abercrombie Fitch and Polestar Automotive.
Diversification Opportunities for Abercrombie Fitch and Polestar Automotive
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Abercrombie and Polestar is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Abercrombie Fitch and Polestar Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polestar Automotive and Abercrombie Fitch 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 Abercrombie Fitch are associated (or correlated) with Polestar Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polestar Automotive has no effect on the direction of Abercrombie Fitch i.e., Abercrombie Fitch and Polestar Automotive go up and down completely randomly.
Pair Corralation between Abercrombie Fitch and Polestar Automotive
Considering the 90-day investment horizon Abercrombie Fitch is expected to generate 0.37 times more return on investment than Polestar Automotive. However, Abercrombie Fitch is 2.69 times less risky than Polestar Automotive. It trades about 0.13 of its potential returns per unit of risk. Polestar Automotive Holding is currently generating about 0.0 per unit of risk. If you would invest 3,495 in Abercrombie Fitch on August 31, 2024 and sell it today you would earn a total of 11,474 from holding Abercrombie Fitch or generate 328.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abercrombie Fitch vs. Polestar Automotive Holding
Performance |
| Timeline |
| Abercrombie Fitch |
| Polestar Automotive |
Abercrombie Fitch and Polestar Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abercrombie Fitch and Polestar Automotive
The main advantage of trading using opposite Abercrombie Fitch and Polestar Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abercrombie Fitch position performs unexpectedly, Polestar Automotive 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 Polestar Automotive will offset losses from the drop in Polestar Automotive's long position.| Abercrombie Fitch vs. Urban Outfitters | Abercrombie Fitch vs. Foot Locker | Abercrombie Fitch vs. Childrens Place | Abercrombie Fitch vs. American Eagle Outfitters |
| Polestar Automotive vs. Lucid Group | Polestar Automotive vs. Canoo Inc | Polestar Automotive vs. Rivian Automotive | Polestar Automotive vs. Aston Martin Lagonda |
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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