Correlation Between Polen Small and Polen International

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

Diversification Opportunities for Polen Small and Polen International

0.29

Correlation Coefficient

Polen Small  Polen International

Modest diversification

The 3 months correlation between Polen and Polen is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Polen Small and Polen International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen International has no effect on the direction of Polen Small i.e., Polen Small and Polen International go up and down completely randomly.

Pair Corralation between Polen Small and Polen International

Assuming the 90 days horizon Polen Small is expected to under-perform the Polen International. In addition to that, Polen Small is 1.46 times more volatile than Polen International Growth. It trades about -0.16 of its total potential returns per unit of risk. Polen International Growth is currently generating about -0.01 per unit of volatility. If you would invest  1,639  in Polen International Growth on December 4, 2024 and sell it today you would lose (13.00) from holding Polen International Growth or give up 0.79% of portfolio value over 90 days.

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

Polen Small  vs.  Polen International Growth

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 International

Risk-Adjusted Performance

Weak

Over the last 90 days Polen International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Polen International 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 Small and Polen International

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

The idea behind Polen Small and Polen International Growth 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.

Check out your portfolio center.

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.