Correlation Between Polaris Industries and Kontoor Brands
Can any of the company-specific risk be diversified away by investing in both Polaris Industries and Kontoor Brands 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 Kontoor Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polaris Industries and Kontoor Brands, you can compare the effects of market volatilities on Polaris Industries and Kontoor Brands 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 Kontoor Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polaris Industries and Kontoor Brands.
Diversification Opportunities for Polaris Industries and Kontoor Brands
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Polaris and Kontoor is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Industries and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands 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 Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of Polaris Industries i.e., Polaris Industries and Kontoor Brands go up and down completely randomly.
Pair Corralation between Polaris Industries and Kontoor Brands
Considering the 90-day investment horizon Polaris Industries is expected to under-perform the Kontoor Brands. In addition to that, Polaris Industries is 1.2 times more volatile than Kontoor Brands. It trades about -0.05 of its total potential returns per unit of risk. Kontoor Brands is currently generating about 0.1 per unit of volatility. If you would invest 7,050 in Kontoor Brands on August 24, 2024 and sell it today you would earn a total of 1,735 from holding Kontoor Brands or generate 24.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Polaris Industries vs. Kontoor Brands
Performance |
| Timeline |
| Polaris Industries |
| Kontoor Brands |
Polaris Industries and Kontoor Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polaris Industries and Kontoor Brands
The main advantage of trading using opposite Polaris Industries and Kontoor Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Industries position performs unexpectedly, Kontoor Brands 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 Kontoor Brands will offset losses from the drop in Kontoor Brands' 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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