Correlation Between Polen Small and Fundvantage Trust

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

Diversification Opportunities for Polen Small and Fundvantage Trust

0.77

Correlation Coefficient

Polen Small  Fundvantage Trust

Poor diversification

The 3 months correlation between Polen and Fundvantage is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Polen Small and Fundvantage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundvantage Trust 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 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 Small i.e., Polen Small and Fundvantage Trust go up and down completely randomly.

Pair Corralation between Polen Small and Fundvantage Trust

Assuming the 90 days horizon Polen Small is expected to generate 6.84 times more return on investment than Fundvantage Trust. However, Polen Small is 6.84 times more volatile than Fundvantage Trust . It trades about 0.2 of its potential returns per unit of risk. Fundvantage Trust is currently generating about 0.17 per unit of risk. If you would invest  1,399  in Polen Small on September 13, 2024 and sell it today you would earn a total of  216.00  from holding Polen Small or generate 15.44% return on investment over 90 days.

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

Polen Small  vs.  Fundvantage Trust

Polen Small

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Polen Small are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Polen Small showed solid returns over the last few months and may actually be approaching a breakup point.

Fundvantage Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fundvantage Trust are ranked lower than 13 (%) 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 Small and Fundvantage Trust

The main advantage of trading using opposite Polen Small and Fundvantage Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polen Small 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 Small 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.