Correlation Between Polar Capital and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks Plc, you can compare the effects of market volatilities on Polar Capital and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Fevertree Drinks.
Diversification Opportunities for Polar Capital and Fevertree Drinks
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Polar and Fevertree is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of Polar Capital i.e., Polar Capital and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Polar Capital and Fevertree Drinks
Assuming the 90 days trading horizon Polar Capital is expected to generate 6.12 times less return on investment than Fevertree Drinks. But when comparing it to its historical volatility, Polar Capital Technology is 2.5 times less risky than Fevertree Drinks. It trades about 0.07 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 67,150 in Fevertree Drinks Plc on November 2, 2024 and sell it today you would earn a total of 11,950 from holding Fevertree Drinks Plc or generate 17.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. Fevertree Drinks Plc
Performance |
| Timeline |
| Polar Capital Technology |
| Fevertree Drinks Plc |
Polar Capital and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Fevertree Drinks
The main advantage of trading using opposite Polar Capital and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Polar Capital vs. Synthomer plc | Polar Capital vs. Edita Food Industries | Polar Capital vs. Home Depot | Polar Capital vs. Cairn Homes PLC |
| Fevertree Drinks vs. Accesso Technology Group | Fevertree Drinks vs. Spotify Technology SA | Fevertree Drinks vs. Software Circle plc | Fevertree Drinks vs. Various Eateries 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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