Correlation Between Polar Capital and Heavitree Brewery
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Heavitree Brewery 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 Heavitree Brewery 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 Heavitree Brewery, you can compare the effects of market volatilities on Polar Capital and Heavitree Brewery 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 Heavitree Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Heavitree Brewery.
Diversification Opportunities for Polar Capital and Heavitree Brewery
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Polar and Heavitree is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Heavitree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heavitree Brewery 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 Heavitree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heavitree Brewery has no effect on the direction of Polar Capital i.e., Polar Capital and Heavitree Brewery go up and down completely randomly.
Pair Corralation between Polar Capital and Heavitree Brewery
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 1.84 times more return on investment than Heavitree Brewery. However, Polar Capital is 1.84 times more volatile than Heavitree Brewery. It trades about 0.07 of its potential returns per unit of risk. Heavitree Brewery is currently generating about 0.03 per unit of risk. If you would invest 28,900 in Polar Capital Technology on August 27, 2024 and sell it today you would earn a total of 5,550 from holding Polar Capital Technology or generate 19.2% 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. Heavitree Brewery
Performance |
| Timeline |
| Polar Capital Technology |
| Heavitree Brewery |
Polar Capital and Heavitree Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Heavitree Brewery
The main advantage of trading using opposite Polar Capital and Heavitree Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Heavitree Brewery 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 Heavitree Brewery will offset losses from the drop in Heavitree Brewery's long position.| Polar Capital vs. Catalyst Media Group | Polar Capital vs. Oncimmune Holdings plc | Polar Capital vs. Invesco Health Care | Polar Capital vs. Coor Service Management |
| Heavitree Brewery vs. Polar Capital Technology | Heavitree Brewery vs. Host Hotels Resorts | Heavitree Brewery vs. Molson Coors Beverage | Heavitree Brewery vs. X FAB Silicon Foundries |
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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