Correlation Between Polar Capital and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Flow Traders 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 Flow Traders 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 Flow Traders NV, you can compare the effects of market volatilities on Polar Capital and Flow Traders 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 Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Flow Traders.
Diversification Opportunities for Polar Capital and Flow Traders
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Polar and Flow is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Polar Capital i.e., Polar Capital and Flow Traders go up and down completely randomly.
Pair Corralation between Polar Capital and Flow Traders
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 1.13 times more return on investment than Flow Traders. However, Polar Capital is 1.13 times more volatile than Flow Traders NV. It trades about 0.17 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.02 per unit of risk. If you would invest 31,450 in Polar Capital Technology on August 30, 2024 and sell it today you would earn a total of 2,000 from holding Polar Capital Technology or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. Flow Traders NV
Performance |
| Timeline |
| Polar Capital Technology |
| Flow Traders NV |
Polar Capital and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Flow Traders
The main advantage of trading using opposite Polar Capital and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.| Polar Capital vs. Samsung Electronics Co | Polar Capital vs. Samsung Electronics Co | Polar Capital vs. Hyundai Motor | Polar Capital vs. Toyota Motor Corp |
| Flow Traders vs. Tungsten West PLC | Flow Traders vs. Argo Group Limited | Flow Traders vs. Hardide PLC | Flow Traders vs. Versarien PLC |
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 Stocks Directory module to find actively traded stocks across global markets.
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