Correlation Between Polestar Automotive and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Polestar Automotive and Volkswagen 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 Volkswagen 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 Volkswagen AG 110, you can compare the effects of market volatilities on Polestar Automotive and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polestar Automotive and Volkswagen.
Diversification Opportunities for Polestar Automotive and Volkswagen
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Polestar and Volkswagen is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Polestar Automotive Holding and Volkswagen AG 110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 110 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG 110 has no effect on the direction of Polestar Automotive i.e., Polestar Automotive and Volkswagen go up and down completely randomly.
Pair Corralation between Polestar Automotive and Volkswagen
Given the investment horizon of 90 days Polestar Automotive Holding is expected to generate 3.59 times more return on investment than Volkswagen. However, Polestar Automotive is 3.59 times more volatile than Volkswagen AG 110. It trades about -0.01 of its potential returns per unit of risk. Volkswagen AG 110 is currently generating about -0.05 per unit of risk. If you would invest 212.00 in Polestar Automotive Holding on September 14, 2024 and sell it today you would lose (109.50) from holding Polestar Automotive Holding or give up 51.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Polestar Automotive Holding vs. Volkswagen AG 110
Performance |
| Timeline |
| Polestar Automotive |
| Volkswagen AG 110 |
Polestar Automotive and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polestar Automotive and Volkswagen
The main advantage of trading using opposite Polestar Automotive and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polestar Automotive position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Polestar Automotive vs. Lucid Group | Polestar Automotive vs. Rivian Automotive | Polestar Automotive vs. Canoo Inc | Polestar Automotive vs. Nio Class A |
| Volkswagen vs. Porsche Automobile Holding | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Volkswagen AG | Volkswagen vs. Mercedes Benz Group AG |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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