Correlation Between IShares Continen and Polar Capital

Can any of the company-specific risk be diversified away by investing in both IShares Continen 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 IShares Continen and Polar Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Continen Eurp and Polar Capital Funds, you can compare the effects of market volatilities on IShares Continen 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 IShares Continen with a short position of Polar Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Continen and Polar Capital.

Diversification Opportunities for IShares Continen and Polar Capital

-0.42

Correlation Coefficient

IShares Continen  Polar Capital

Very good diversification

The 3 months correlation between IShares and Polar is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding iShares Continen Eurp and Polar Capital Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polar Capital Funds and IShares Continen 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 iShares Continen Eurp 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 Funds has no effect on the direction of IShares Continen i.e., IShares Continen and Polar Capital go up and down completely randomly.

Pair Corralation between IShares Continen and Polar Capital

Assuming the 90 days trading horizon IShares Continen is expected to generate 24.62 times less return on investment than Polar Capital. In addition to that, IShares Continen is 1.19 times more volatile than Polar Capital Funds. It trades about 0.0 of its total potential returns per unit of risk. Polar Capital Funds is currently generating about 0.1 per unit of volatility. If you would invest  34,818  in Polar Capital Funds on September 22, 2024 and sell it today you would earn a total of  479.00  from holding Polar Capital Funds or generate 1.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

iShares Continen Eurp  vs.  Polar Capital Funds

iShares Continen Eurp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Continen Eurp has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, IShares Continen is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Polar Capital Funds

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polar Capital Funds are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Polar Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Continen and Polar Capital

The main advantage of trading using opposite IShares Continen and Polar Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Continen 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.

The idea behind iShares Continen Eurp and Polar Capital Funds pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.