Correlation Between Polar Capital and Wise Plc
Can any of the company-specific risk be diversified away by investing in both Polar Capital and Wise 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 Wise 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 Wise plc, you can compare the effects of market volatilities on Polar Capital and Wise 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 Wise Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Wise Plc.
Diversification Opportunities for Polar Capital and Wise Plc
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Polar and Wise is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Wise plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wise 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 Wise Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wise plc has no effect on the direction of Polar Capital i.e., Polar Capital and Wise Plc go up and down completely randomly.
Pair Corralation between Polar Capital and Wise Plc
Assuming the 90 days trading horizon Polar Capital is expected to generate 4.8 times less return on investment than Wise Plc. But when comparing it to its historical volatility, Polar Capital Technology is 1.7 times less risky than Wise Plc. It trades about 0.19 of its potential returns per unit of risk. Wise plc is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 92,700 in Wise plc on October 11, 2024 and sell it today you would earn a total of 18,400 from holding Wise plc or generate 19.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polar Capital Technology vs. Wise plc
Performance |
| Timeline |
| Polar Capital Technology |
| Wise plc |
Polar Capital and Wise Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polar Capital and Wise Plc
The main advantage of trading using opposite Polar Capital and Wise Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polar Capital position performs unexpectedly, Wise 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 Wise Plc will offset losses from the drop in Wise Plc's long position.| Polar Capital vs. Smithson Investment Trust | Polar Capital vs. Bankers Investment Trust | Polar Capital vs. Zoom Video Communications | Polar Capital vs. New Residential Investment |
| Wise Plc vs. Gamma Communications PLC | Wise Plc vs. Fonix Mobile plc | Wise Plc vs. MTI Wireless Edge | Wise Plc vs. Molson Coors Beverage |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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