Correlation Between Polestar Automotive and Mercedes Benz
Can any of the company-specific risk be diversified away by investing in both Polestar Automotive and Mercedes Benz 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 Mercedes Benz 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 Mercedes Benz Group AG, you can compare the effects of market volatilities on Polestar Automotive and Mercedes Benz 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 Mercedes Benz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polestar Automotive and Mercedes Benz.
Diversification Opportunities for Polestar Automotive and Mercedes Benz
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Polestar and Mercedes is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Polestar Automotive Holding and Mercedes Benz Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercedes Benz 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 Mercedes Benz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercedes Benz Group has no effect on the direction of Polestar Automotive i.e., Polestar Automotive and Mercedes Benz go up and down completely randomly.
Pair Corralation between Polestar Automotive and Mercedes Benz
Assuming the 90 days horizon Polestar Automotive Holding is expected to generate 7.21 times more return on investment than Mercedes Benz. However, Polestar Automotive is 7.21 times more volatile than Mercedes Benz Group AG. It trades about 0.05 of its potential returns per unit of risk. Mercedes Benz Group AG is currently generating about 0.03 per unit of risk. If you would invest 21.00 in Polestar Automotive Holding on November 1, 2024 and sell it today you would earn a total of 0.90 from holding Polestar Automotive Holding or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polestar Automotive Holding vs. Mercedes Benz Group AG
Performance |
| Timeline |
| Polestar Automotive |
| Mercedes Benz Group |
Polestar Automotive and Mercedes Benz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polestar Automotive and Mercedes Benz
The main advantage of trading using opposite Polestar Automotive and Mercedes Benz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polestar Automotive position performs unexpectedly, Mercedes Benz 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 Mercedes Benz will offset losses from the drop in Mercedes Benz's long position.| Polestar Automotive vs. Lucid Group | Polestar Automotive vs. Canoo Inc | Polestar Automotive vs. Rivian Automotive | Polestar Automotive vs. Aston Martin Lagonda |
| Mercedes Benz vs. Porsche Automobile Holding | Mercedes Benz vs. Volkswagen AG 110 | Mercedes Benz vs. Mercedes Benz Group AG | Mercedes Benz vs. Volkswagen AG Pref |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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