Correlation Between NWTN Warrant and Polestar Automotive
Can any of the company-specific risk be diversified away by investing in both NWTN Warrant 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 NWTN Warrant and Polestar Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NWTN Warrant and Polestar Automotive Holding, you can compare the effects of market volatilities on NWTN Warrant 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 NWTN Warrant with a short position of Polestar Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of NWTN Warrant and Polestar Automotive.
Diversification Opportunities for NWTN Warrant and Polestar Automotive
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NWTN and Polestar is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NWTN Warrant and Polestar Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polestar Automotive and NWTN Warrant 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 NWTN Warrant 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 NWTN Warrant i.e., NWTN Warrant and Polestar Automotive go up and down completely randomly.
Pair Corralation between NWTN Warrant and Polestar Automotive
Assuming the 90 days horizon NWTN Warrant is expected to generate 7.35 times more return on investment than Polestar Automotive. However, NWTN Warrant is 7.35 times more volatile than Polestar Automotive Holding. It trades about 0.15 of its potential returns per unit of risk. Polestar Automotive Holding is currently generating about -0.27 per unit of risk. If you would invest 3.50 in NWTN Warrant on January 31, 2024 and sell it today you would earn a total of 1.51 from holding NWTN Warrant or generate 43.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 80.49% |
Values | Daily Returns |
NWTN Warrant vs. Polestar Automotive Holding
Performance |
Timeline |
NWTN Warrant |
Polestar Automotive |
NWTN Warrant and Polestar Automotive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NWTN Warrant and Polestar Automotive
The main advantage of trading using opposite NWTN Warrant and Polestar Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NWTN Warrant 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.NWTN Warrant vs. Ford Motor | NWTN Warrant vs. General Motors | NWTN Warrant vs. Goodyear Tire Rubber | NWTN Warrant vs. Li AutoInc |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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