Correlation Between Polen Global and Polen Smid

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

Diversification Opportunities for Polen Global and Polen Smid

0.94

Correlation Coefficient

Polen Global  Polen Smid

Almost no diversification

The 3 months correlation between Polen and Polen is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Polen Global Growth and Polen Smid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Smid and Polen Global 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 Global Growth 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 Global i.e., Polen Global and Polen Smid go up and down completely randomly.

Pair Corralation between Polen Global and Polen Smid

Assuming the 90 days horizon Polen Global Growth is expected to under-perform the Polen Smid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Polen Global Growth is 1.33 times less risky than Polen Smid. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Polen Smid is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  866.00  in Polen Smid on September 14, 2024 and sell it today you would earn a total of  13.00  from holding Polen Smid or generate 1.5% return on investment over 90 days.

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

Polen Global Growth  vs.  Polen Smid

Polen Global Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polen Global Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Polen Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Polen Smid

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Polen Smid are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Polen Smid showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polen Global and Polen Smid

The main advantage of trading using opposite Polen Global and Polen Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polen Global 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 Global Growth 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.