Correlation Between Capital Metals and Polar Capital
Can any of the company-specific risk be diversified away by investing in both Capital Metals 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 Capital Metals and Polar Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Metals PLC and Polar Capital Technology, you can compare the effects of market volatilities on Capital Metals 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 Capital Metals with a short position of Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Metals and Polar Capital.
Diversification Opportunities for Capital Metals and Polar Capital
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capital and Polar is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC 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 Capital Metals 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 Capital Metals PLC 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 Capital Metals i.e., Capital Metals and Polar Capital go up and down completely randomly.
Pair Corralation between Capital Metals and Polar Capital
Assuming the 90 days trading horizon Capital Metals PLC is expected to generate 7.71 times more return on investment than Polar Capital. However, Capital Metals is 7.71 times more volatile than Polar Capital Technology. It trades about 0.03 of its potential returns per unit of risk. Polar Capital Technology is currently generating about 0.11 per unit of risk. If you would invest 285.00 in Capital Metals PLC on October 28, 2024 and sell it today you would lose (117.00) from holding Capital Metals PLC or give up 41.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Metals PLC vs. Polar Capital Technology
Performance |
| Timeline |
| Capital Metals PLC |
| Polar Capital Technology |
Capital Metals and Polar Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Metals and Polar Capital
The main advantage of trading using opposite Capital Metals and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Metals 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.| Capital Metals vs. Givaudan SA | Capital Metals vs. Antofagasta PLC | Capital Metals vs. Ferrexpo PLC | Capital Metals vs. Atalaya Mining |
| Polar Capital vs. Zegona Communications Plc | Polar Capital vs. Catena Media PLC | Polar Capital vs. Flutter Entertainment PLC | Polar Capital vs. Intermediate Capital 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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