Correlation Between Polaris Industries and Winnebago Industries

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

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

Diversification Opportunities for Polaris Industries and Winnebago Industries

-0.12

Correlation Coefficient

Polaris Industries  Winnebago Industries

Good diversification

The 3 months correlation between Polaris and Winnebago is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Industries and Winnebago Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winnebago Industries and Polaris Industries 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 Polaris Industries are associated (or correlated) with Winnebago Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winnebago Industries has no effect on the direction of Polaris Industries i.e., Polaris Industries and Winnebago Industries go up and down completely randomly.

Pair Corralation between Polaris Industries and Winnebago Industries

Considering the 90-day investment horizon Polaris Industries is expected to under-perform the Winnebago Industries. But the stock apears to be less risky and, when comparing its historical volatility, Polaris Industries is 1.35 times less risky than Winnebago Industries. The stock trades about -0.04 of its potential returns per unit of risk. The Winnebago Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,711  in Winnebago Industries on September 2, 2024 and sell it today you would earn a total of  143.00  from holding Winnebago Industries or generate 2.5% return on investment over 90 days.

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

Polaris Industries  vs.  Winnebago Industries

Polaris Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polaris Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Winnebago Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Winnebago Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Winnebago Industries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Polaris Industries and Winnebago Industries

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

The idea behind Polaris Industries and Winnebago Industries 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.