Correlation Between IPC MEXICO and Polaris
Can any of the company-specific risk be diversified away by investing in both IPC MEXICO and Polaris 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 IPC MEXICO and Polaris into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IPC MEXICO and Polaris, you can compare the effects of market volatilities on IPC MEXICO and Polaris 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 IPC MEXICO with a short position of Polaris. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPC MEXICO and Polaris.
Diversification Opportunities for IPC MEXICO and Polaris
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between IPC and Polaris is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding IPC MEXICO and Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polaris and IPC MEXICO 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 IPC MEXICO are associated (or correlated) with Polaris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polaris has no effect on the direction of IPC MEXICO i.e., IPC MEXICO and Polaris go up and down completely randomly.
Pair Corralation between IPC MEXICO and Polaris
Assuming the 90 days trading horizon IPC MEXICO is expected to generate 1.26 times less return on investment than Polaris. In addition to that, IPC MEXICO is 3.83 times more volatile than Polaris. It trades about 0.05 of its total potential returns per unit of risk. Polaris is currently generating about 0.22 per unit of volatility. If you would invest 156,148 in Polaris on September 12, 2024 and sell it today you would earn a total of 1,352 from holding Polaris or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
IPC MEXICO vs. Polaris
Performance |
| Timeline |
IPC MEXICO and Polaris Volatility Contrast
Predicted Return Density |
| Returns |
IPC MEXICO
Pair trading matchups for IPC MEXICO
Polaris
Pair trading matchups for Polaris
Pair Trading with IPC MEXICO and Polaris
The main advantage of trading using opposite IPC MEXICO and Polaris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPC MEXICO position performs unexpectedly, Polaris 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 Polaris will offset losses from the drop in Polaris' long position.| IPC MEXICO vs. UnitedHealth Group Incorporated | IPC MEXICO vs. Applied Materials | IPC MEXICO vs. Grupo Sports World | IPC MEXICO vs. New Oriental Education |
| Polaris vs. Costco Wholesale | Polaris vs. Capital One Financial | Polaris vs. Grupo Hotelero Santa | Polaris vs. GMxico Transportes SAB |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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