Correlation Between Polestar Automotive and Mazda
Can any of the company-specific risk be diversified away by investing in both Polestar Automotive and Mazda 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 Mazda 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 Mazda Motor, you can compare the effects of market volatilities on Polestar Automotive and Mazda 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 Mazda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polestar Automotive and Mazda.
Diversification Opportunities for Polestar Automotive and Mazda
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Polestar and Mazda is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Polestar Automotive Holding and Mazda Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mazda Motor 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 Mazda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mazda Motor has no effect on the direction of Polestar Automotive i.e., Polestar Automotive and Mazda go up and down completely randomly.
Pair Corralation between Polestar Automotive and Mazda
Assuming the 90 days horizon Polestar Automotive Holding is expected to generate 3.41 times more return on investment than Mazda. However, Polestar Automotive is 3.41 times more volatile than Mazda Motor. It trades about 0.04 of its potential returns per unit of risk. Mazda Motor is currently generating about -0.1 per unit of risk. If you would invest 15.00 in Polestar Automotive Holding on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Polestar Automotive Holding or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.63% |
| Values | Daily Returns |
Polestar Automotive Holding vs. Mazda Motor
Performance |
| Timeline |
| Polestar Automotive |
| Mazda Motor |
Polestar Automotive and Mazda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polestar Automotive and Mazda
The main advantage of trading using opposite Polestar Automotive and Mazda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polestar Automotive position performs unexpectedly, Mazda 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 Mazda will offset losses from the drop in Mazda's long position.| Polestar Automotive vs. GreenPower Motor | Polestar Automotive vs. ZEEKR Intelligent Technology | Polestar Automotive vs. Volcon Inc | Polestar Automotive vs. Ford Motor |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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