Correlation Between CATCo Reinsurance and Polar Capital
Can any of the company-specific risk be diversified away by investing in both CATCo Reinsurance 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 CATCo Reinsurance and Polar Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATCo Reinsurance Opportunities and Polar Capital Technology, you can compare the effects of market volatilities on CATCo Reinsurance 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 CATCo Reinsurance with a short position of Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATCo Reinsurance and Polar Capital.
Diversification Opportunities for CATCo Reinsurance and Polar Capital
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CATCo and Polar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding CATCo Reinsurance Opportunitie 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 CATCo Reinsurance 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 CATCo Reinsurance Opportunities 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 CATCo Reinsurance i.e., CATCo Reinsurance and Polar Capital go up and down completely randomly.
Pair Corralation between CATCo Reinsurance and Polar Capital
Assuming the 90 days trading horizon CATCo Reinsurance Opportunities is expected to generate 6.92 times more return on investment than Polar Capital. However, CATCo Reinsurance is 6.92 times more volatile than Polar Capital Technology. It trades about 0.22 of its potential returns per unit of risk. Polar Capital Technology is currently generating about 0.25 per unit of risk. If you would invest 2,500 in CATCo Reinsurance Opportunities on August 28, 2024 and sell it today you would earn a total of 1,250 from holding CATCo Reinsurance Opportunities or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
CATCo Reinsurance Opportunitie vs. Polar Capital Technology
Performance |
| Timeline |
| CATCo Reinsurance |
| Polar Capital Technology |
CATCo Reinsurance and Polar Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATCo Reinsurance and Polar Capital
The main advantage of trading using opposite CATCo Reinsurance and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATCo Reinsurance 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.| CATCo Reinsurance vs. Samsung Electronics Co | CATCo Reinsurance vs. Samsung Electronics Co | CATCo Reinsurance vs. Hyundai Motor | CATCo Reinsurance vs. Toyota Motor Corp |
| Polar Capital vs. Catalyst Media Group | Polar Capital vs. Oncimmune Holdings plc | Polar Capital vs. Invesco Health Care | Polar Capital vs. Coor Service Management |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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