Correlation Between ETC On and Polar Capital

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

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

Diversification Opportunities for ETC On and Polar Capital

0.48

Correlation Coefficient

ETC On  Polar Capital

Very weak diversification

The 3 months correlation between ETC and Polar is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ETC on CMCI 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 ETC On 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 ETC on CMCI 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 ETC On i.e., ETC On and Polar Capital go up and down completely randomly.

Pair Corralation between ETC On and Polar Capital

Assuming the 90 days trading horizon ETC on CMCI is expected to generate 0.71 times more return on investment than Polar Capital. However, ETC on CMCI is 1.4 times less risky than Polar Capital. It trades about 0.2 of its potential returns per unit of risk. Polar Capital Funds is currently generating about 0.1 per unit of risk. If you would invest  17,422  in ETC on CMCI on September 22, 2024 and sell it today you would earn a total of  342.00  from holding ETC on CMCI or generate 1.96% return on investment over 90 days.

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

ETC on CMCI  vs.  Polar Capital Funds

ETC on CMCI

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ETC on CMCI are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ETC On is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private 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 ETC On and Polar Capital

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

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.