Correlation Between EZGO Technologies and Polaris Industries

Can any of the company-specific risk be diversified away by investing in both EZGO Technologies and Polaris Industries 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 EZGO Technologies and Polaris Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EZGO Technologies and Polaris Industries, you can compare the effects of market volatilities on EZGO Technologies and Polaris Industries 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 EZGO Technologies with a short position of Polaris Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of EZGO Technologies and Polaris Industries.

Diversification Opportunities for EZGO Technologies and Polaris Industries

0.83

Correlation Coefficient

EZGO Technologies  Polaris Industries

Very poor diversification

The 3 months correlation between EZGO and Polaris is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding EZGO Technologies and Polaris Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polaris Industries and EZGO Technologies 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 EZGO Technologies are associated (or correlated) with Polaris Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polaris Industries has no effect on the direction of EZGO Technologies i.e., EZGO Technologies and Polaris Industries go up and down completely randomly.

Pair Corralation between EZGO Technologies and Polaris Industries

Given the investment horizon of 90 days EZGO Technologies is expected to under-perform the Polaris Industries. In addition to that, EZGO Technologies is 1.61 times more volatile than Polaris Industries. It trades about -0.23 of its total potential returns per unit of risk. Polaris Industries is currently generating about -0.12 per unit of volatility. If you would invest  5,631  in Polaris Industries on December 28, 2024 and sell it today you would lose (1,308) from holding Polaris Industries or give up 23.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

EZGO Technologies  vs.  Polaris Industries

EZGO Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days EZGO Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Polaris Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polaris Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with EZGO Technologies and Polaris Industries

The main advantage of trading using opposite EZGO Technologies and Polaris Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EZGO Technologies position performs unexpectedly, Polaris Industries 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 Polaris Industries will offset losses from the drop in Polaris Industries' long position.

The idea behind EZGO Technologies and Polaris Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.