Correlation Between Polar Capital and Ecofin Global

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

By analyzing existing cross correlation between Polar Capital Technology and Ecofin Global Utilities, you can compare the effects of market volatilities on Polar Capital and Ecofin Global 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 Polar Capital with a short position of Ecofin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polar Capital and Ecofin Global.

Diversification Opportunities for Polar Capital and Ecofin Global

-0.68

Correlation Coefficient

Polar Capital  Ecofin Global

Excellent diversification

The 3 months correlation between Polar and Ecofin is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Ecofin Global Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Global Utilities and Polar Capital 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 Polar Capital Technology are associated (or correlated) with Ecofin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Global Utilities has no effect on the direction of Polar Capital i.e., Polar Capital and Ecofin Global go up and down completely randomly.

Pair Corralation between Polar Capital and Ecofin Global

Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.52 times more return on investment than Ecofin Global. However, Polar Capital Technology is 1.91 times less risky than Ecofin Global. It trades about 0.19 of its potential returns per unit of risk. Ecofin Global Utilities is currently generating about -0.08 per unit of risk. If you would invest  34,050  in Polar Capital Technology on October 10, 2024 and sell it today you would earn a total of  1,300  from holding Polar Capital Technology or generate 3.82% return on investment over 90 days.

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

Polar Capital Technology  vs.  Ecofin Global Utilities

Polar Capital Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Polar Capital Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Polar Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ecofin Global Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecofin Global Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Ecofin Global is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Polar Capital and Ecofin Global

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

The idea behind Polar Capital Technology and Ecofin Global Utilities 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.