Correlation Between International Biotechnology and Polar Capital
Can any of the company-specific risk be diversified away by investing in both International Biotechnology 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 International Biotechnology and Polar Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Biotechnology Trust and Polar Capital Technology, you can compare the effects of market volatilities on International Biotechnology 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 International Biotechnology with a short position of Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Biotechnology and Polar Capital.
Diversification Opportunities for International Biotechnology and Polar Capital
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Polar is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding International Biotechnology Tr 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 International Biotechnology 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 International Biotechnology Trust 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 International Biotechnology i.e., International Biotechnology and Polar Capital go up and down completely randomly.
Pair Corralation between International Biotechnology and Polar Capital
Assuming the 90 days trading horizon International Biotechnology is expected to generate 2.23 times less return on investment than Polar Capital. But when comparing it to its historical volatility, International Biotechnology Trust is 1.13 times less risky than Polar Capital. It trades about 0.08 of its potential returns per unit of risk. Polar Capital Technology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 31,450 in Polar Capital Technology on August 30, 2024 and sell it today you would earn a total of 1,750 from holding Polar Capital Technology or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Biotechnology Tr vs. Polar Capital Technology
Performance |
| Timeline |
| International Biotechnology |
| Polar Capital Technology |
International Biotechnology and Polar Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Biotechnology and Polar Capital
The main advantage of trading using opposite International Biotechnology and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Biotechnology 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.| International Biotechnology vs. Tungsten West PLC | International Biotechnology vs. Argo Group Limited | International Biotechnology vs. Hardide PLC | International Biotechnology vs. Versarien PLC |
| Polar Capital vs. Samsung Electronics Co | Polar Capital vs. Samsung Electronics Co | Polar Capital vs. Hyundai Motor | Polar Capital vs. Toyota Motor Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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