Correlation Between Pax Esg and Polen Us

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

By analyzing existing cross correlation between Pax Esg Beta and Polen Small Pany, you can compare the effects of market volatilities on Pax Esg and Polen Us 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 Pax Esg with a short position of Polen Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pax Esg and Polen Us.

Diversification Opportunities for Pax Esg and Polen Us

-0.04

Correlation Coefficient

Pax Esg  Polen Us

Good diversification

The 3 months correlation between Pax and Polen is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Pax Esg Beta and Polen Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Small Pany and Pax Esg 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 Pax Esg Beta are associated (or correlated) with Polen Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Small Pany has no effect on the direction of Pax Esg i.e., Pax Esg and Polen Us go up and down completely randomly.

Pair Corralation between Pax Esg and Polen Us

Assuming the 90 days horizon Pax Esg Beta is expected to under-perform the Polen Us. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pax Esg Beta is 1.74 times less risky than Polen Us. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Polen Small Pany is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,454  in Polen Small Pany on October 26, 2024 and sell it today you would earn a total of  132.00  from holding Polen Small Pany or generate 9.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

Pax Esg Beta  vs.  Polen Small Pany

Pax Esg Beta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pax Esg Beta has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Polen Small Pany

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polen Small Pany are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Polen Us may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pax Esg and Polen Us

The main advantage of trading using opposite Pax Esg and Polen Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pax Esg position performs unexpectedly, Polen Us 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 Us will offset losses from the drop in Polen Us' long position.

The idea behind Pax Esg Beta and Polen Small Pany 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.