Correlation Between Polar Capital and TMT Investments
Can any of the company-specific risk be diversified away by investing in both Polar Capital and TMT Investments 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 TMT Investments 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 TMT Investments PLC, you can compare the effects of market volatilities on Polar Capital and TMT Investments 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 TMT Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and TMT Investments.
Diversification Opportunities for Polar Capital and TMT Investments
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Polar and TMT is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and TMT Investments PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Investments 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 TMT Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Investments PLC has no effect on the direction of Polar Capital i.e., Polar Capital and TMT Investments go up and down completely randomly.
Pair Corralation between Polar Capital and TMT Investments
Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.63 times more return on investment than TMT Investments. However, Polar Capital Technology is 1.57 times less risky than TMT Investments. It trades about 0.1 of its potential returns per unit of risk. TMT Investments PLC is currently generating about 0.01 per unit of risk. If you would invest 22,600 in Polar Capital Technology on August 26, 2024 and sell it today you would earn a total of 11,850 from holding Polar Capital Technology or generate 52.43% 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. TMT Investments PLC
Performance |
| Timeline |
| Polar Capital Technology |
| TMT Investments PLC |
Polar Capital and TMT Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and TMT Investments
The main advantage of trading using opposite Polar Capital and TMT Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, TMT Investments 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 TMT Investments will offset losses from the drop in TMT Investments' 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 |
| TMT Investments vs. Retail Estates NV | TMT Investments vs. Ross Stores | TMT Investments vs. Tatton Asset Management | TMT Investments vs. Litigation Capital Management |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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