Correlation Between Preformed Line and Polar Power
Can any of the company-specific risk be diversified away by investing in both Preformed Line and Polar Power 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 Preformed Line and Polar Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Preformed Line Products and Polar Power, you can compare the effects of market volatilities on Preformed Line and Polar Power 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 Preformed Line with a short position of Polar Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Preformed Line and Polar Power.
Diversification Opportunities for Preformed Line and Polar Power
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Preformed and Polar is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Preformed Line Products and Polar Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Power and Preformed Line 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 Preformed Line Products are associated (or correlated) with Polar Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Power has no effect on the direction of Preformed Line i.e., Preformed Line and Polar Power go up and down completely randomly.
Pair Corralation between Preformed Line and Polar Power
Given the investment horizon of 90 days Preformed Line Products is expected to generate 0.25 times more return on investment than Polar Power. However, Preformed Line Products is 4.07 times less risky than Polar Power. It trades about -0.16 of its potential returns per unit of risk. Polar Power is currently generating about -0.04 per unit of risk. If you would invest 14,089 in Preformed Line Products on September 13, 2024 and sell it today you would lose (870.00) from holding Preformed Line Products or give up 6.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Preformed Line Products vs. Polar Power
Performance |
| Timeline |
| Preformed Line Products |
| Polar Power |
Preformed Line and Polar Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Preformed Line and Polar Power
The main advantage of trading using opposite Preformed Line and Polar Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preformed Line position performs unexpectedly, Polar Power 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 Polar Power will offset losses from the drop in Polar Power's long position.| Preformed Line vs. Kimball Electronics | Preformed Line vs. nVent Electric PLC | Preformed Line vs. Espey Mfg Electronics | Preformed Line vs. Hubbell |
| Polar Power vs. CBAK Energy Technology | Polar Power vs. Ocean Power Technologies | Polar Power vs. Enersys | Polar Power vs. Flux Power Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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