Correlation Between Polar Capital and Prudential Plc
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Prudential Plc 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 Prudential Plc 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 Prudential plc, you can compare the effects of market volatilities on Polar Capital and Prudential Plc 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 Prudential Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Prudential Plc.
Diversification Opportunities for Polar Capital and Prudential Plc
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Polar and Prudential is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Prudential plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential 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 Prudential Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential plc has no effect on the direction of Polar Capital i.e., Polar Capital and Prudential Plc go up and down completely randomly.
Pair Corralation between Polar Capital and Prudential Plc
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.68 times more return on investment than Prudential Plc. However, Polar Capital Technology is 1.48 times less risky than Prudential Plc. It trades about 0.09 of its potential returns per unit of risk. Prudential plc is currently generating about -0.04 per unit of risk. If you would invest 19,060 in Polar Capital Technology on November 29, 2024 and sell it today you would earn a total of 15,490 from holding Polar Capital Technology or generate 81.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Polar Capital Technology vs. Prudential plc
Performance |
| Timeline |
| Polar Capital Technology |
| Prudential plc |
Polar Capital and Prudential Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Prudential Plc
The main advantage of trading using opposite Polar Capital and Prudential Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Prudential Plc 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 Prudential Plc will offset losses from the drop in Prudential Plc's long position.| Polar Capital vs. Edita Food Industries | Polar Capital vs. Induction Healthcare Group | Polar Capital vs. National Beverage Corp | Polar Capital vs. Darden Restaurants |
| Prudential Plc vs. Infrastrutture Wireless Italiane | Prudential Plc vs. Atalaya Mining | Prudential Plc vs. Anglo Asian Mining | Prudential Plc vs. Bisichi Mining PLC |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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