Correlation Between Wcm Focused and Polen Growth
Can any of the company-specific risk be diversified away by investing in both Wcm Focused and Polen Growth 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 Wcm Focused and Polen Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wcm Focused International and Polen Growth Fund, you can compare the effects of market volatilities on Wcm Focused and Polen Growth 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 Wcm Focused with a short position of Polen Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wcm Focused and Polen Growth.
Diversification Opportunities for Wcm Focused and Polen Growth
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wcm and Polen is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Wcm Focused International and Polen Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Growth and Wcm Focused 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 Wcm Focused International are associated (or correlated) with Polen Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Growth has no effect on the direction of Wcm Focused i.e., Wcm Focused and Polen Growth go up and down completely randomly.
Pair Corralation between Wcm Focused and Polen Growth
Assuming the 90 days horizon Wcm Focused is expected to generate 1.76 times less return on investment than Polen Growth. But when comparing it to its historical volatility, Wcm Focused International is 1.07 times less risky than Polen Growth. It trades about 0.05 of its potential returns per unit of risk. Polen Growth Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,645 in Polen Growth Fund on September 2, 2024 and sell it today you would earn a total of 1,198 from holding Polen Growth Fund or generate 32.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wcm Focused International vs. Polen Growth Fund
Performance |
| Timeline |
| Wcm Focused International |
| Polen Growth |
Wcm Focused and Polen Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wcm Focused and Polen Growth
The main advantage of trading using opposite Wcm Focused and Polen Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wcm Focused position performs unexpectedly, Polen Growth 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 Growth will offset losses from the drop in Polen Growth's long position.| Wcm Focused vs. International Advantage Portfolio | Wcm Focused vs. Causeway Emerging Markets | Wcm Focused vs. Artisan Developing World | Wcm Focused vs. Wcm Focused Emerging |
| Polen Growth vs. Polen Growth Fund | Polen Growth vs. Edgewood Growth Fund | Polen Growth vs. Akre Focus Fund | Polen Growth vs. Brown Advisory Sustainable |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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