Correlation Between Polen Smid and Fundvantage Trust

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

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

Diversification Opportunities for Polen Smid and Fundvantage Trust

-0.11

Correlation Coefficient

Polen Smid  Fundvantage Trust

Good diversification

The 3 months correlation between Polen and Fundvantage is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Polen Smid and Fundvantage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundvantage Trust and Polen Smid 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 Polen Smid are associated (or correlated) with Fundvantage Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundvantage Trust has no effect on the direction of Polen Smid i.e., Polen Smid and Fundvantage Trust go up and down completely randomly.

Pair Corralation between Polen Smid and Fundvantage Trust

Assuming the 90 days horizon Polen Smid is expected to under-perform the Fundvantage Trust. In addition to that, Polen Smid is 5.49 times more volatile than Fundvantage Trust . It trades about -0.22 of its total potential returns per unit of risk. Fundvantage Trust is currently generating about 0.06 per unit of volatility. If you would invest  1,021  in Fundvantage Trust on December 4, 2024 and sell it today you would earn a total of  8.00  from holding Fundvantage Trust or generate 0.78% return on investment over 90 days.

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

Polen Smid  vs.  Fundvantage Trust

Polen Smid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polen Smid 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 forward 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.

Fundvantage Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fundvantage Trust are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fundvantage Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Polen Smid and Fundvantage Trust

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

The idea behind Polen Smid and Fundvantage Trust 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.