Correlation Between Banking Fund and Polen International
Can any of the company-specific risk be diversified away by investing in both Banking Fund and Polen International 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 Banking Fund and Polen International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banking Fund Class and Polen International Growth, you can compare the effects of market volatilities on Banking Fund and Polen International 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 Banking Fund with a short position of Polen International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banking Fund and Polen International.
Diversification Opportunities for Banking Fund and Polen International
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANKING and Polen is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Banking Fund Class and Polen International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen International and Banking Fund 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 Banking Fund Class are associated (or correlated) with Polen International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen International has no effect on the direction of Banking Fund i.e., Banking Fund and Polen International go up and down completely randomly.
Pair Corralation between Banking Fund and Polen International
Assuming the 90 days horizon Banking Fund Class is expected to generate 3.0 times more return on investment than Polen International. However, Banking Fund is 3.0 times more volatile than Polen International Growth. It trades about 0.22 of its potential returns per unit of risk. Polen International Growth is currently generating about 0.06 per unit of risk. If you would invest 9,055 in Banking Fund Class on August 30, 2024 and sell it today you would earn a total of 1,073 from holding Banking Fund Class or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banking Fund Class vs. Polen International Growth
Performance |
| Timeline |
| Banking Fund Class |
| Polen International |
Banking Fund and Polen International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banking Fund and Polen International
The main advantage of trading using opposite Banking Fund and Polen International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banking Fund position performs unexpectedly, Polen International 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 International will offset losses from the drop in Polen International's long position.| Banking Fund vs. Basic Materials Fund | Banking Fund vs. Basic Materials Fund | Banking Fund vs. Basic Materials Fund | Banking Fund vs. Sp Midcap 400 |
| Polen International vs. Polen Growth Fund | Polen International vs. Congress Mid Cap | Polen International vs. Polen Global Growth | Polen International vs. Zacks Dividend Fund |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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