Correlation Between Polar Capital and Metals Exploration
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Metals Exploration 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 Metals Exploration 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 Metals Exploration Plc, you can compare the effects of market volatilities on Polar Capital and Metals Exploration 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 Metals Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Metals Exploration.
Diversification Opportunities for Polar Capital and Metals Exploration
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Polar and Metals is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Metals Exploration Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Exploration 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 Metals Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Exploration Plc has no effect on the direction of Polar Capital i.e., Polar Capital and Metals Exploration go up and down completely randomly.
Pair Corralation between Polar Capital and Metals Exploration
Assuming the 90 days trading horizon Polar Capital is expected to generate 2.04 times less return on investment than Metals Exploration. But when comparing it to its historical volatility, Polar Capital Technology is 2.89 times less risky than Metals Exploration. It trades about 0.1 of its potential returns per unit of risk. Metals Exploration Plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 185.00 in Metals Exploration Plc on November 5, 2024 and sell it today you would earn a total of 335.00 from holding Metals Exploration Plc or generate 181.08% 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. Metals Exploration Plc
Performance |
| Timeline |
| Polar Capital Technology |
| Metals Exploration Plc |
Polar Capital and Metals Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Metals Exploration
The main advantage of trading using opposite Polar Capital and Metals Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Metals Exploration 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 Metals Exploration will offset losses from the drop in Metals Exploration's long position.| Polar Capital vs. Take Two Interactive Software | Polar Capital vs. JD Sports Fashion | Polar Capital vs. GreenX Metals | Polar Capital vs. Wheaton Precious Metals |
| Metals Exploration vs. Beazer Homes USA | Metals Exploration vs. American Homes 4 | Metals Exploration vs. Dalata Hotel Group | Metals Exploration vs. Odfjell Drilling |
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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