Correlation Between TMT Investments and Polar Capital
Can any of the company-specific risk be diversified away by investing in both TMT Investments and Polar Capital 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 TMT Investments and Polar Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMT Investments PLC and Polar Capital Technology, you can compare the effects of market volatilities on TMT Investments and Polar Capital 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 TMT Investments with a short position of Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMT Investments and Polar Capital.
Diversification Opportunities for TMT Investments and Polar Capital
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TMT and Polar is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding TMT Investments PLC and Polar Capital Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Capital Technology and TMT Investments 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 TMT Investments PLC are associated (or correlated) with Polar Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polar Capital Technology has no effect on the direction of TMT Investments i.e., TMT Investments and Polar Capital go up and down completely randomly.
Pair Corralation between TMT Investments and Polar Capital
Assuming the 90 days trading horizon TMT Investments is expected to generate 2.38 times less return on investment than Polar Capital. In addition to that, TMT Investments is 1.41 times more volatile than Polar Capital Technology. It trades about 0.04 of its total potential returns per unit of risk. Polar Capital Technology is currently generating about 0.14 per unit of volatility. If you would invest 31,550 in Polar Capital Technology on August 29, 2024 and sell it today you would earn a total of 1,650 from holding Polar Capital Technology or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TMT Investments PLC vs. Polar Capital Technology
Performance |
| Timeline |
| TMT Investments PLC |
| Polar Capital Technology |
TMT Investments and Polar Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMT Investments and Polar Capital
The main advantage of trading using opposite TMT Investments and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMT Investments position performs unexpectedly, Polar Capital 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 Capital will offset losses from the drop in Polar Capital's long position.| TMT Investments vs. Toyota Motor Corp | TMT Investments vs. Lendinvest PLC | TMT Investments vs. Neometals | TMT Investments vs. Coor Service Management |
| Polar Capital vs. Toyota Motor Corp | Polar Capital vs. Lendinvest PLC | Polar Capital vs. Neometals | Polar Capital vs. Coor Service Management |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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