Correlation Between Df Dent and Polen Growth

Can any of the company-specific risk be diversified away by investing in both Df Dent 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 Df Dent and Polen Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Df Dent Premier and Polen Growth Fund, you can compare the effects of market volatilities on Df Dent 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 Df Dent with a short position of Polen Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Df Dent and Polen Growth.

Diversification Opportunities for Df Dent and Polen Growth

0.73

Correlation Coefficient

Df Dent  Polen Growth

Poor diversification

The 3 months correlation between DFDPX and Polen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Df Dent Premier and Polen Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Growth and Df Dent 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 Df Dent Premier 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 Df Dent i.e., Df Dent and Polen Growth go up and down completely randomly.

Pair Corralation between Df Dent and Polen Growth

Assuming the 90 days horizon Df Dent Premier is expected to under-perform the Polen Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Df Dent Premier is 1.21 times less risky than Polen Growth. The mutual fund trades about -0.3 of its potential returns per unit of risk. The Polen Growth Fund is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  4,712  in Polen Growth Fund on December 2, 2024 and sell it today you would lose (126.00) from holding Polen Growth Fund or give up 2.67% of portfolio value over 90 days.

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

Df Dent Premier  vs.  Polen Growth Fund

Df Dent Premier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Df Dent Premier has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Polen Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polen Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Polen Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Df Dent and Polen Growth

The main advantage of trading using opposite Df Dent and Polen Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Df Dent 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.

The idea behind Df Dent Premier and Polen Growth Fund 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.