Correlation Between Espey Mfg and Polar Power
Can any of the company-specific risk be diversified away by investing in both Espey Mfg and Polar Power 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 Espey Mfg and Polar Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Espey Mfg Electronics and Polar Power, you can compare the effects of market volatilities on Espey Mfg and Polar Power 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 Espey Mfg with a short position of Polar Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Espey Mfg and Polar Power.
Diversification Opportunities for Espey Mfg and Polar Power
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Espey and Polar is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics and Polar Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Power and Espey Mfg 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 Espey Mfg Electronics are associated (or correlated) with Polar Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Power has no effect on the direction of Espey Mfg i.e., Espey Mfg and Polar Power go up and down completely randomly.
Pair Corralation between Espey Mfg and Polar Power
Considering the 90-day investment horizon Espey Mfg Electronics is expected to under-perform the Polar Power. But the stock apears to be less risky and, when comparing its historical volatility, Espey Mfg Electronics is 4.38 times less risky than Polar Power. The stock trades about -0.14 of its potential returns per unit of risk. The Polar Power is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 304.00 in Polar Power on August 27, 2024 and sell it today you would earn a total of 34.00 from holding Polar Power or generate 11.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Espey Mfg Electronics vs. Polar Power
Performance |
| Timeline |
| Espey Mfg Electronics |
| Polar Power |
Espey Mfg and Polar Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Espey Mfg and Polar Power
The main advantage of trading using opposite Espey Mfg and Polar Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Espey Mfg position performs unexpectedly, Polar Power 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 Power will offset losses from the drop in Polar Power's long position.| Espey Mfg vs. Chicago Rivet Machine | Espey Mfg vs. Eastern Co | Espey Mfg vs. Servotronics | Espey Mfg vs. Evans Bancorp |
| Polar Power vs. Plug Power | Polar Power vs. Microvast Holdings | Polar Power vs. Solid Power | Polar Power vs. CBAK Energy Technology |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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