Correlation Between Volkswagen and Polestar Automotive
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Polestar Automotive 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 Volkswagen and Polestar Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Polestar Automotive Holding, you can compare the effects of market volatilities on Volkswagen and Polestar Automotive 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 Volkswagen with a short position of Polestar Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Polestar Automotive.
Diversification Opportunities for Volkswagen and Polestar Automotive
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Volkswagen and Polestar is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Polestar Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polestar Automotive and Volkswagen 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 Volkswagen AG are associated (or correlated) with Polestar Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polestar Automotive has no effect on the direction of Volkswagen i.e., Volkswagen and Polestar Automotive go up and down completely randomly.
Pair Corralation between Volkswagen and Polestar Automotive
Assuming the 90 days horizon Volkswagen AG is expected to under-perform the Polestar Automotive. But the pink sheet apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 5.26 times less risky than Polestar Automotive. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Polestar Automotive Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Polestar Automotive Holding on September 2, 2024 and sell it today you would lose (8.00) from holding Polestar Automotive Holding or give up 34.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. Polestar Automotive Holding
Performance |
| Timeline |
| Volkswagen AG |
| Polestar Automotive |
Volkswagen and Polestar Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Polestar Automotive
The main advantage of trading using opposite Volkswagen and Polestar Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Polestar Automotive 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 Polestar Automotive will offset losses from the drop in Polestar Automotive's long position.| Volkswagen vs. Volkswagen AG 110 | Volkswagen vs. Stellantis NV | Volkswagen vs. Toyota Motor | Volkswagen vs. Honda Motor Co |
| Polestar Automotive vs. Lucid Group | Polestar Automotive vs. Canoo Inc | Polestar Automotive vs. Rivian Automotive | Polestar Automotive vs. Aston Martin Lagonda |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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