Correlation Between Polar Capital and NOW
Can any of the company-specific risk be diversified away by investing in both Polar Capital and NOW 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 NOW 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 NOW Inc, you can compare the effects of market volatilities on Polar Capital and NOW 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 NOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and NOW.
Diversification Opportunities for Polar Capital and NOW
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Polar and NOW is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and NOW Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOW Inc 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 NOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOW Inc has no effect on the direction of Polar Capital i.e., Polar Capital and NOW go up and down completely randomly.
Pair Corralation between Polar Capital and NOW
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.51 times more return on investment than NOW. However, Polar Capital Technology is 1.97 times less risky than NOW. It trades about 0.11 of its potential returns per unit of risk. NOW Inc is currently generating about 0.03 per unit of risk. If you would invest 17,080 in Polar Capital Technology on September 14, 2024 and sell it today you would earn a total of 17,270 from holding Polar Capital Technology or generate 101.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.77% |
| Values | Daily Returns |
Polar Capital Technology vs. NOW Inc
Performance |
| Timeline |
| Polar Capital Technology |
| NOW Inc |
Polar Capital and NOW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and NOW
The main advantage of trading using opposite Polar Capital and NOW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, NOW 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 NOW will offset losses from the drop in NOW's long position.| Polar Capital vs. Ally Financial | Polar Capital vs. MoneysupermarketCom Group PLC | Polar Capital vs. Cembra Money Bank | Polar Capital vs. Sabre Insurance Group |
| NOW vs. Polar Capital Technology | NOW vs. GreenX Metals | NOW vs. CAP LEASE AVIATION | NOW vs. Silvercorp Metals |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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