Correlation Between Polar Capital and LBG Media
Can any of the company-specific risk be diversified away by investing in both Polar Capital and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Polar Capital and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and LBG Media.
Diversification Opportunities for Polar Capital and LBG Media
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Polar and LBG is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Polar Capital i.e., Polar Capital and LBG Media go up and down completely randomly.
Pair Corralation between Polar Capital and LBG Media
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.77 times more return on investment than LBG Media. However, Polar Capital Technology is 1.29 times less risky than LBG Media. It trades about 0.26 of its potential returns per unit of risk. LBG Media PLC is currently generating about -0.06 per unit of risk. If you would invest 31,550 in Polar Capital Technology on August 28, 2024 and sell it today you would earn a total of 2,800 from holding Polar Capital Technology or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. LBG Media PLC
Performance |
| Timeline |
| Polar Capital Technology |
| LBG Media PLC |
Polar Capital and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and LBG Media
The main advantage of trading using opposite Polar Capital and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Polar Capital vs. JLEN Environmental Assets | Polar Capital vs. Direct Line Insurance | Polar Capital vs. Medical Properties Trust | Polar Capital vs. Scandic Hotels Group |
| LBG Media vs. SupplyMe Capital PLC | LBG Media vs. SM Energy Co | LBG Media vs. FuelCell Energy | LBG Media vs. Grand Vision Media |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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