Correlation Between Polen International and Polen Small
Can any of the company-specific risk be diversified away by investing in both Polen International and Polen Small 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 Polen International and Polen Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polen International Growth and Polen Small, you can compare the effects of market volatilities on Polen International and Polen Small 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 Polen International with a short position of Polen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polen International and Polen Small.
Diversification Opportunities for Polen International and Polen Small
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Polen and Polen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Polen International Growth and Polen Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Small and Polen International 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 Polen International Growth are associated (or correlated) with Polen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Small has no effect on the direction of Polen International i.e., Polen International and Polen Small go up and down completely randomly.
Pair Corralation between Polen International and Polen Small
Assuming the 90 days horizon Polen International Growth is expected to generate 0.77 times more return on investment than Polen Small. However, Polen International Growth is 1.29 times less risky than Polen Small. It trades about 0.39 of its potential returns per unit of risk. Polen Small is currently generating about 0.18 per unit of risk. If you would invest 1,566 in Polen International Growth on November 9, 2024 and sell it today you would earn a total of 104.00 from holding Polen International Growth or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polen International Growth vs. Polen Small
Performance |
| Timeline |
| Polen International |
| Polen Small |
Polen International and Polen Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polen International and Polen Small
The main advantage of trading using opposite Polen International and Polen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polen International position performs unexpectedly, Polen Small 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 Polen Small will offset losses from the drop in Polen Small's long position.| Polen International vs. Polen Growth Fund | Polen International vs. Polen Growth Fund | Polen International vs. Polen Global Growth | Polen International vs. Polen Small |
| Polen Small vs. Us Government Securities | Polen Small vs. Ridgeworth Seix Government | Polen Small vs. Us Government Securities | Polen Small vs. Intermediate Government Bond |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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