Correlation Between Polestar Automotive and Subaru Corp
Can any of the company-specific risk be diversified away by investing in both Polestar Automotive and Subaru Corp 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 Subaru Corp 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 Subaru Corp ADR, you can compare the effects of market volatilities on Polestar Automotive and Subaru Corp 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 Subaru Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polestar Automotive and Subaru Corp.
Diversification Opportunities for Polestar Automotive and Subaru Corp
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Polestar and Subaru is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Polestar Automotive Holding and Subaru Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Subaru Corp ADR 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 Subaru Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Subaru Corp ADR has no effect on the direction of Polestar Automotive i.e., Polestar Automotive and Subaru Corp go up and down completely randomly.
Pair Corralation between Polestar Automotive and Subaru Corp
Assuming the 90 days horizon Polestar Automotive Holding is expected to generate 3.82 times more return on investment than Subaru Corp. However, Polestar Automotive is 3.82 times more volatile than Subaru Corp ADR. It trades about 0.08 of its potential returns per unit of risk. Subaru Corp ADR is currently generating about 0.03 per unit of risk. If you would invest 13.00 in Polestar Automotive Holding on March 21, 2024 and sell it today you would earn a total of 1.00 from holding Polestar Automotive Holding or generate 7.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Polestar Automotive Holding vs. Subaru Corp ADR
Performance |
Timeline |
Polestar Automotive |
Subaru Corp ADR |
Polestar Automotive and Subaru Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Polestar Automotive and Subaru Corp
The main advantage of trading using opposite Polestar Automotive and Subaru Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polestar Automotive position performs unexpectedly, Subaru Corp 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 Subaru Corp will offset losses from the drop in Subaru Corp's long position.Polestar Automotive vs. Vicinity Motor Corp | Polestar Automotive vs. Blue Bird Corp | Polestar Automotive vs. AYRO Inc | Polestar Automotive vs. Honda Motor Co |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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