Correlation Between Polar Capital and Morgan Advanced
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Morgan Advanced 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 Morgan Advanced 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 Morgan Advanced Materials, you can compare the effects of market volatilities on Polar Capital and Morgan Advanced 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 Morgan Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Morgan Advanced.
Diversification Opportunities for Polar Capital and Morgan Advanced
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Polar and Morgan is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Morgan Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Advanced Materials 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 Morgan Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Advanced Materials has no effect on the direction of Polar Capital i.e., Polar Capital and Morgan Advanced go up and down completely randomly.
Pair Corralation between Polar Capital and Morgan Advanced
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.88 times more return on investment than Morgan Advanced. However, Polar Capital Technology is 1.14 times less risky than Morgan Advanced. It trades about 0.1 of its potential returns per unit of risk. Morgan Advanced Materials is currently generating about 0.04 per unit of risk. If you would invest 24,450 in Polar Capital Technology on September 14, 2024 and sell it today you would earn a total of 9,900 from holding Polar Capital Technology or generate 40.49% 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. Morgan Advanced Materials
Performance |
| Timeline |
| Polar Capital Technology |
| Morgan Advanced Materials |
Polar Capital and Morgan Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Morgan Advanced
The main advantage of trading using opposite Polar Capital and Morgan Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Morgan Advanced 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 Morgan Advanced will offset losses from the drop in Morgan Advanced's long position.| Polar Capital vs. Ally Financial | Polar Capital vs. MoneysupermarketCom Group PLC | Polar Capital vs. Cembra Money Bank | Polar Capital vs. Sabre Insurance Group |
| Morgan Advanced vs. Polar Capital Technology | Morgan Advanced vs. National Beverage Corp | Morgan Advanced vs. Cognizant Technology Solutions | Morgan Advanced vs. Scandinavian Tobacco Group |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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