Correlation Between Polen Us and Forum Funds

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

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

Diversification Opportunities for Polen Us and Forum Funds

0.78

Correlation Coefficient

Polen Us  Forum Funds

Poor diversification

The 3 months correlation between Polen and Forum is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Polen Small Pany and Forum Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Funds and Polen Us 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 Small Pany are associated (or correlated) with Forum Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Funds has no effect on the direction of Polen Us i.e., Polen Us and Forum Funds go up and down completely randomly.

Pair Corralation between Polen Us and Forum Funds

Assuming the 90 days horizon Polen Small Pany is expected to under-perform the Forum Funds. In addition to that, Polen Us is 2.49 times more volatile than Forum Funds . It trades about -0.26 of its total potential returns per unit of risk. Forum Funds is currently generating about -0.24 per unit of volatility. If you would invest  1,061  in Forum Funds on October 10, 2024 and sell it today you would lose (25.00) from holding Forum Funds or give up 2.36% of portfolio value over 90 days.

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

Polen Small Pany  vs.  Forum Funds

Polen Small Pany

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polen Small Pany are ranked lower than 7 (%) 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.

Forum Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forum Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Forum Funds 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 Us and Forum Funds

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

The idea behind Polen Small Pany and Forum 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..