Correlation Between Polestar Automotive and Vicinity
Can any of the company-specific risk be diversified away by investing in both Polestar Automotive and Vicinity 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 Vicinity 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 Vicinity Motor Corp, you can compare the effects of market volatilities on Polestar Automotive and Vicinity 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 Vicinity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polestar Automotive and Vicinity.
Diversification Opportunities for Polestar Automotive and Vicinity
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Polestar and Vicinity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Polestar Automotive Holding and Vicinity Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Motor Corp 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 Vicinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Motor Corp has no effect on the direction of Polestar Automotive i.e., Polestar Automotive and Vicinity go up and down completely randomly.
Pair Corralation between Polestar Automotive and Vicinity
Given the investment horizon of 90 days Polestar Automotive Holding is expected to generate 0.46 times more return on investment than Vicinity. However, Polestar Automotive Holding is 2.17 times less risky than Vicinity. It trades about -0.04 of its potential returns per unit of risk. Vicinity Motor Corp is currently generating about -0.05 per unit of risk. If you would invest 555.00 in Polestar Automotive Holding on August 31, 2024 and sell it today you would lose (441.00) from holding Polestar Automotive Holding or give up 79.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polestar Automotive Holding vs. Vicinity Motor Corp
Performance |
| Timeline |
| Polestar Automotive |
| Vicinity Motor Corp |
Polestar Automotive and Vicinity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polestar Automotive and Vicinity
The main advantage of trading using opposite Polestar Automotive and Vicinity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polestar Automotive position performs unexpectedly, Vicinity 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 Vicinity will offset losses from the drop in Vicinity's long position.| Polestar Automotive vs. Lucid Group | Polestar Automotive vs. Rivian Automotive | Polestar Automotive vs. Canoo Inc | Polestar Automotive vs. Nio Class A |
| Vicinity vs. Blue Bird Corp | Vicinity vs. AYRO Inc | Vicinity vs. BAIC Motor | Vicinity vs. Zapp Electric Vehicles |
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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