Correlation Between Polestar Automotive and Renault SA
Can any of the company-specific risk be diversified away by investing in both Polestar Automotive and Renault SA 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 Renault SA 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 Renault SA, you can compare the effects of market volatilities on Polestar Automotive and Renault SA 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 Renault SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polestar Automotive and Renault SA.
Diversification Opportunities for Polestar Automotive and Renault SA
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Polestar and Renault is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Polestar Automotive Holding and Renault SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renault SA 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 Renault SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renault SA has no effect on the direction of Polestar Automotive i.e., Polestar Automotive and Renault SA go up and down completely randomly.
Pair Corralation between Polestar Automotive and Renault SA
Assuming the 90 days horizon Polestar Automotive Holding is expected to generate 5.77 times more return on investment than Renault SA. However, Polestar Automotive is 5.77 times more volatile than Renault SA. It trades about 0.04 of its potential returns per unit of risk. Renault SA is currently generating about -0.05 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polestar Automotive Holding vs. Renault SA
Performance |
| Timeline |
| Polestar Automotive |
| Renault SA |
Polestar Automotive and Renault SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polestar Automotive and Renault SA
The main advantage of trading using opposite Polestar Automotive and Renault SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polestar Automotive position performs unexpectedly, Renault SA 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 Renault SA will offset losses from the drop in Renault SA's long position.| Polestar Automotive vs. GreenPower Motor | Polestar Automotive vs. ZEEKR Intelligent Technology | Polestar Automotive vs. Volcon Inc | Polestar Automotive vs. Ford Motor |
| Renault SA vs. Mazda Motor | Renault SA vs. Subaru Corp ADR | Renault SA vs. Bayerische Motoren Werke | Renault SA vs. Isuzu Motors |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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