Correlation Between Polestar Automotive and Lucid
Can any of the company-specific risk be diversified away by investing in both Polestar Automotive and Lucid 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 Polestar Automotive and Lucid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polestar Automotive Holding and Lucid Group, you can compare the effects of market volatilities on Polestar Automotive and Lucid 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 Polestar Automotive with a short position of Lucid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polestar Automotive and Lucid.
Diversification Opportunities for Polestar Automotive and Lucid
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Polestar and Lucid is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Polestar Automotive Holding and Lucid Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucid Group and Polestar Automotive 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 Polestar Automotive Holding are associated (or correlated) with Lucid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucid Group has no effect on the direction of Polestar Automotive i.e., Polestar Automotive and Lucid go up and down completely randomly.
Pair Corralation between Polestar Automotive and Lucid
Given the investment horizon of 90 days Polestar Automotive Holding is expected to generate 1.39 times more return on investment than Lucid. However, Polestar Automotive is 1.39 times more volatile than Lucid Group. It trades about 0.07 of its potential returns per unit of risk. Lucid Group is currently generating about -0.02 per unit of risk. If you would invest 77.00 in Polestar Automotive Holding on August 24, 2024 and sell it today you would earn a total of 33.00 from holding Polestar Automotive Holding or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polestar Automotive Holding vs. Lucid Group
Performance |
| Timeline |
| Polestar Automotive |
| Lucid Group |
Polestar Automotive and Lucid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polestar Automotive and Lucid
The main advantage of trading using opposite Polestar Automotive and Lucid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polestar Automotive position performs unexpectedly, Lucid 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 Lucid will offset losses from the drop in Lucid's long position.| Polestar Automotive vs. Lucid Group | Polestar Automotive vs. Rivian Automotive | Polestar Automotive vs. Canoo Inc | Polestar Automotive vs. Nio Class A |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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