Correlation Between Polar Capital and Derwent London
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Derwent London 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 Derwent London 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 Derwent London PLC, you can compare the effects of market volatilities on Polar Capital and Derwent London 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 Derwent London. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Derwent London.
Diversification Opportunities for Polar Capital and Derwent London
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Polar and Derwent is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Derwent London PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derwent London PLC 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 Derwent London. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derwent London PLC has no effect on the direction of Polar Capital i.e., Polar Capital and Derwent London go up and down completely randomly.
Pair Corralation between Polar Capital and Derwent London
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 1.14 times more return on investment than Derwent London. However, Polar Capital is 1.14 times more volatile than Derwent London PLC. It trades about 0.06 of its potential returns per unit of risk. Derwent London PLC is currently generating about -0.04 per unit of risk. If you would invest 30,250 in Polar Capital Technology on September 2, 2024 and sell it today you would earn a total of 3,350 from holding Polar Capital Technology or generate 11.07% 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. Derwent London PLC
Performance |
| Timeline |
| Polar Capital Technology |
| Derwent London PLC |
Polar Capital and Derwent London Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Derwent London
The main advantage of trading using opposite Polar Capital and Derwent London positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Derwent London 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 Derwent London will offset losses from the drop in Derwent London's long position.| Polar Capital vs. Toyota Motor Corp | Polar Capital vs. SoftBank Group Corp | Polar Capital vs. OTP Bank Nyrt | Polar Capital vs. Las Vegas Sands |
| Derwent London vs. Baker Steel Resources | Derwent London vs. United States Steel | Derwent London vs. Foresight Environmental Infrastructure | Derwent London vs. JLEN Environmental Assets |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |