Correlation Between Polen Us and Pax Large

Can any of the company-specific risk be diversified away by investing in both Polen Us and Pax Large 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 Pax Large 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 Pax Large Cap, you can compare the effects of market volatilities on Polen Us and Pax Large 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 Pax Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polen Us and Pax Large.

Diversification Opportunities for Polen Us and Pax Large

0.28

Correlation Coefficient

Polen Us  Pax Large

Modest diversification

The 3 months correlation between Polen and Pax is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Polen Small Pany and Pax Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Large Cap 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 Pax Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Large Cap has no effect on the direction of Polen Us i.e., Polen Us and Pax Large go up and down completely randomly.

Pair Corralation between Polen Us and Pax Large

Assuming the 90 days horizon Polen Small Pany is expected to generate 0.85 times more return on investment than Pax Large. However, Polen Small Pany is 1.18 times less risky than Pax Large. It trades about 0.06 of its potential returns per unit of risk. Pax Large Cap is currently generating about -0.04 per unit of risk. 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 Together
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Polen Small Pany  vs.  Pax Large Cap

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.

Pax Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Polen Us and Pax Large

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

The idea behind Polen Small Pany and Pax Large Cap 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.