Correlation Between Polar Capital and GreenX Metals
Can any of the company-specific risk be diversified away by investing in both Polar Capital and GreenX 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 GreenX 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 GreenX Metals, you can compare the effects of market volatilities on Polar Capital and GreenX 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 GreenX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and GreenX Metals.
Diversification Opportunities for Polar Capital and GreenX Metals
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Polar and GreenX is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals 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 GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of Polar Capital i.e., Polar Capital and GreenX Metals go up and down completely randomly.
Pair Corralation between Polar Capital and GreenX Metals
Assuming the 90 days trading horizon Polar Capital is expected to generate 1.91 times less return on investment than GreenX Metals. But when comparing it to its historical volatility, Polar Capital Technology is 1.66 times less risky than GreenX Metals. It trades about 0.18 of its potential returns per unit of risk. GreenX Metals is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,420 in GreenX Metals on October 12, 2024 and sell it today you would earn a total of 230.00 from holding GreenX Metals or generate 6.73% 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. GreenX Metals
Performance |
| Timeline |
| Polar Capital Technology |
| GreenX Metals |
Polar Capital and GreenX Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and GreenX Metals
The main advantage of trading using opposite Polar Capital and GreenX Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, GreenX 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 GreenX Metals will offset losses from the drop in GreenX Metals' long position.| Polar Capital vs. Smithson Investment Trust | Polar Capital vs. Bankers Investment Trust | Polar Capital vs. Zoom Video Communications | Polar Capital vs. New Residential Investment |
| GreenX Metals vs. Cairn Homes PLC | GreenX Metals vs. Software Circle plc | GreenX Metals vs. Polar Capital Technology | GreenX Metals vs. Home Depot |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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