Correlation Between Polar Capital and National Beverage
Can any of the company-specific risk be diversified away by investing in both Polar Capital and National Beverage 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 Polar Capital and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polar Capital Technology and National Beverage Corp, you can compare the effects of market volatilities on Polar Capital and National Beverage 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 Polar Capital with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and National Beverage.
Diversification Opportunities for Polar Capital and National Beverage
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Polar and National is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and Polar Capital 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 Polar Capital Technology are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Polar Capital i.e., Polar Capital and National Beverage go up and down completely randomly.
Pair Corralation between Polar Capital and National Beverage
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.79 times more return on investment than National Beverage. However, Polar Capital Technology is 1.26 times less risky than National Beverage. It trades about 0.23 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.06 per unit of risk. If you would invest 31,360 in Polar Capital Technology on October 24, 2024 and sell it today you would earn a total of 5,990 from holding Polar Capital Technology or generate 19.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Polar Capital Technology vs. National Beverage Corp
Performance |
| Timeline |
| Polar Capital Technology |
| National Beverage Corp |
Polar Capital and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and National Beverage
The main advantage of trading using opposite Polar Capital and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Polar Capital vs. Morgan Advanced Materials | Polar Capital vs. JD Sports Fashion | Polar Capital vs. Summit Materials Cl | Polar Capital vs. Veolia Environnement VE |
| National Beverage vs. Allianz Technology Trust | National Beverage vs. Public Storage | National Beverage vs. Polar Capital Technology | National Beverage vs. Take Two Interactive Software |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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