Correlation Between Polen Small and Polen Smid

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

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

Diversification Opportunities for Polen Small and Polen Smid

0.46

Correlation Coefficient

Polen Small  Polen Smid

Very weak diversification

The 3 months correlation between Polen and Polen is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Polen Small and Polen Smid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Smid and Polen Small 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 are associated (or correlated) with Polen Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Smid has no effect on the direction of Polen Small i.e., Polen Small and Polen Smid go up and down completely randomly.

Pair Corralation between Polen Small and Polen Smid

Assuming the 90 days horizon Polen Small is expected to generate 1.02 times more return on investment than Polen Smid. However, Polen Small is 1.02 times more volatile than Polen Smid. It trades about -0.16 of its potential returns per unit of risk. Polen Smid is currently generating about -0.22 per unit of risk. If you would invest  1,609  in Polen Small on December 4, 2024 and sell it today you would lose (182.00) from holding Polen Small or give up 11.31% of portfolio value over 90 days.

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

Polen Small  vs.  Polen Smid

Polen Small

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Polen Small and Polen Smid

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

The idea behind Polen Small and Polen Smid 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.