Correlation Between Polar Capital and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on Polar Capital and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Volkswagen.
Diversification Opportunities for Polar Capital and Volkswagen
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Polar and Volkswagen is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Polar Capital i.e., Polar Capital and Volkswagen go up and down completely randomly.
Pair Corralation between Polar Capital and Volkswagen
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.85 times more return on investment than Volkswagen. However, Polar Capital Technology is 1.18 times less risky than Volkswagen. It trades about 0.09 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.06 per unit of risk. If you would invest 18,400 in Polar Capital Technology on August 30, 2024 and sell it today you would earn a total of 14,800 from holding Polar Capital Technology or generate 80.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. Volkswagen AG
Performance |
| Timeline |
| Polar Capital Technology |
| Volkswagen AG |
Polar Capital and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Volkswagen
The main advantage of trading using opposite Polar Capital and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Polar Capital vs. Toyota Motor Corp | Polar Capital vs. Neometals | Polar Capital vs. Coor Service Management | Polar Capital vs. Jupiter Fund Management |
| Volkswagen vs. Amedeo Air Four | Volkswagen vs. Associated British Foods | Volkswagen vs. Alaska Air Group | Volkswagen vs. Delta Air Lines |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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