Correlation Between Auto Trader and Polar Capital
Can any of the company-specific risk be diversified away by investing in both Auto Trader 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 Auto Trader and Polar Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Polar Capital Technology, you can compare the effects of market volatilities on Auto Trader 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 Auto Trader with a short position of Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Polar Capital.
Diversification Opportunities for Auto Trader and Polar Capital
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Auto and Polar is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group 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 Auto Trader 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 Auto Trader Group 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 Auto Trader i.e., Auto Trader and Polar Capital go up and down completely randomly.
Pair Corralation between Auto Trader and Polar Capital
Assuming the 90 days trading horizon Auto Trader is expected to generate 1.46 times less return on investment than Polar Capital. In addition to that, Auto Trader is 1.05 times more volatile than Polar Capital Technology. It trades about 0.06 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 18,500 in Polar Capital Technology on August 27, 2024 and sell it today you would earn a total of 15,950 from holding Polar Capital Technology or generate 86.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. Polar Capital Technology
Performance |
| Timeline |
| Auto Trader Group |
| Polar Capital Technology |
Auto Trader and Polar Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Polar Capital
The main advantage of trading using opposite Auto Trader and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader 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.| Auto Trader vs. Ondine Biomedical | Auto Trader vs. Europa Metals | Auto Trader vs. Revolution Beauty Group | Auto Trader vs. Biome Technologies Plc |
| Polar Capital vs. JLEN Environmental Assets | Polar Capital vs. Direct Line Insurance | Polar Capital vs. Medical Properties Trust | Polar Capital vs. Scandic Hotels Group |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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