Correlation Between United States and Polar Capital
Can any of the company-specific risk be diversified away by investing in both United States and Polar Capital 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 United States and Polar Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Polar Capital Technology, you can compare the effects of market volatilities on United States and Polar Capital 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 United States with a short position of Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Polar Capital.
Diversification Opportunities for United States and Polar Capital
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and Polar is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Polar Capital Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Capital Technology and United States 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 United States Steel are associated (or correlated) with Polar Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Capital Technology has no effect on the direction of United States i.e., United States and Polar Capital go up and down completely randomly.
Pair Corralation between United States and Polar Capital
Assuming the 90 days trading horizon United States is expected to generate 1.16 times less return on investment than Polar Capital. In addition to that, United States is 2.41 times more volatile than Polar Capital Technology. It trades about 0.04 of its total potential returns per unit of risk. Polar Capital Technology is currently generating about 0.1 per unit of volatility. If you would invest 18,520 in Polar Capital Technology on September 8, 2024 and sell it today you would earn a total of 15,730 from holding Polar Capital Technology or generate 84.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
United States Steel vs. Polar Capital Technology
Performance |
| Timeline |
| United States Steel |
| Polar Capital Technology |
United States and Polar Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Polar Capital
The main advantage of trading using opposite United States and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Polar Capital 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 Polar Capital will offset losses from the drop in Polar Capital's long position.| United States vs. Lendinvest PLC | United States vs. Neometals | United States vs. Coor Service Management | United States vs. Albion Technology General |
| Polar Capital vs. Lendinvest PLC | Polar Capital vs. Neometals | Polar Capital vs. Coor Service Management | Polar Capital vs. Albion Technology General |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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