Correlation Between Polar Capital and Empire Metals
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Empire Metals 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 Empire Metals 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 Empire Metals Limited, you can compare the effects of market volatilities on Polar Capital and Empire Metals 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 Empire Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Empire Metals.
Diversification Opportunities for Polar Capital and Empire Metals
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Polar and Empire is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Empire Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Metals Limited 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 Empire Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Metals Limited has no effect on the direction of Polar Capital i.e., Polar Capital and Empire Metals go up and down completely randomly.
Pair Corralation between Polar Capital and Empire Metals
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.36 times more return on investment than Empire Metals. However, Polar Capital Technology is 2.76 times less risky than Empire Metals. It trades about 0.4 of its potential returns per unit of risk. Empire Metals Limited is currently generating about 0.09 per unit of risk. If you would invest 34,050 in Polar Capital Technology on October 9, 2024 and sell it today you would earn a total of 2,250 from holding Polar Capital Technology or generate 6.61% 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. Empire Metals Limited
Performance |
| Timeline |
| Polar Capital Technology |
| Empire Metals Limited |
Polar Capital and Empire Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Empire Metals
The main advantage of trading using opposite Polar Capital and Empire Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Empire Metals 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 Empire Metals will offset losses from the drop in Empire Metals' long position.| Polar Capital vs. Thor Mining PLC | Polar Capital vs. Virgin Wines UK | Polar Capital vs. DXC Technology Co | Polar Capital vs. Software Circle plc |
| Empire Metals vs. Iron Mountain | Empire Metals vs. Tata Steel Limited | Empire Metals vs. Symphony Environmental Technologies | Empire Metals vs. United Airlines Holdings |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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