Correlation Between Polar Capital and Givaudan
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Givaudan 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 Givaudan 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 Givaudan SA, you can compare the effects of market volatilities on Polar Capital and Givaudan 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 Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Givaudan.
Diversification Opportunities for Polar Capital and Givaudan
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Polar and Givaudan is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Polar Capital i.e., Polar Capital and Givaudan go up and down completely randomly.
Pair Corralation between Polar Capital and Givaudan
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 1.35 times more return on investment than Givaudan. However, Polar Capital is 1.35 times more volatile than Givaudan SA. It trades about 0.42 of its potential returns per unit of risk. Givaudan SA is currently generating about -0.2 per unit of risk. If you would invest 34,700 in Polar Capital Technology on October 29, 2024 and sell it today you would earn a total of 3,550 from holding Polar Capital Technology or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. Givaudan SA
Performance |
| Timeline |
| Polar Capital Technology |
| Givaudan SA |
Polar Capital and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Givaudan
The main advantage of trading using opposite Polar Capital and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Polar Capital vs. SupplyMe Capital PLC | Polar Capital vs. Premier African Minerals | Polar Capital vs. SANTANDER UK 8 | Polar Capital vs. Tower Resources plc |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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