Correlation Between Polar Capital and Associated British
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Polar Capital and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Associated British.
Diversification Opportunities for Polar Capital and Associated British
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Polar and Associated is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Polar Capital i.e., Polar Capital and Associated British go up and down completely randomly.
Pair Corralation between Polar Capital and Associated British
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 1.01 times more return on investment than Associated British. However, Polar Capital is 1.01 times more volatile than Associated British Foods. It trades about 0.09 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.01 per unit of risk. If you would invest 25,500 in Polar Capital Technology on September 12, 2024 and sell it today you would earn a total of 8,600 from holding Polar Capital Technology or generate 33.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. Associated British Foods
Performance |
| Timeline |
| Polar Capital Technology |
| Associated British Foods |
Polar Capital and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Associated British
The main advantage of trading using opposite Polar Capital and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Polar Capital vs. Beowulf Mining | Polar Capital vs. Atalaya Mining | Polar Capital vs. Caledonia Mining | Polar Capital vs. Cairo Communication SpA |
| Associated British vs. Inspiration Healthcare Group | Associated British vs. Universal Health Services | Associated British vs. Naturhouse Health SA | Associated British vs. Gamma Communications 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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