Correlation Between Polaris Industries and Curtiss Motorcycles
Can any of the company-specific risk be diversified away by investing in both Polaris Industries and Curtiss Motorcycles 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 Polaris Industries and Curtiss Motorcycles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polaris Industries and Curtiss Motorcycles, you can compare the effects of market volatilities on Polaris Industries and Curtiss Motorcycles 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 Polaris Industries with a short position of Curtiss Motorcycles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polaris Industries and Curtiss Motorcycles.
Diversification Opportunities for Polaris Industries and Curtiss Motorcycles
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Polaris and Curtiss is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Industries and Curtiss Motorcycles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curtiss Motorcycles and Polaris Industries 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 Polaris Industries are associated (or correlated) with Curtiss Motorcycles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curtiss Motorcycles has no effect on the direction of Polaris Industries i.e., Polaris Industries and Curtiss Motorcycles go up and down completely randomly.
Pair Corralation between Polaris Industries and Curtiss Motorcycles
Considering the 90-day investment horizon Polaris Industries is expected to generate 0.12 times more return on investment than Curtiss Motorcycles. However, Polaris Industries is 8.4 times less risky than Curtiss Motorcycles. It trades about -0.09 of its potential returns per unit of risk. Curtiss Motorcycles is currently generating about -0.07 per unit of risk. If you would invest 7,405 in Polaris Industries on August 27, 2024 and sell it today you would lose (284.00) from holding Polaris Industries or give up 3.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polaris Industries vs. Curtiss Motorcycles
Performance |
| Timeline |
| Polaris Industries |
| Curtiss Motorcycles |
Polaris Industries and Curtiss Motorcycles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polaris Industries and Curtiss Motorcycles
The main advantage of trading using opposite Polaris Industries and Curtiss Motorcycles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Industries position performs unexpectedly, Curtiss Motorcycles 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 Curtiss Motorcycles will offset losses from the drop in Curtiss Motorcycles' long position.| Polaris Industries vs. Thor Industries | Polaris Industries vs. Brunswick | Polaris Industries vs. Harley Davidson | Polaris Industries vs. Winnebago Industries |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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