Correlation Between Polar Power and Hubbell

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

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

Diversification Opportunities for Polar Power and Hubbell

0.22

Correlation Coefficient

Polar Power  Hubbell

Modest diversification

The 3 months correlation between Polar and Hubbell is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Polar Power and Hubbell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubbell and Polar Power 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 Power are associated (or correlated) with Hubbell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubbell has no effect on the direction of Polar Power i.e., Polar Power and Hubbell go up and down completely randomly.

Pair Corralation between Polar Power and Hubbell

Given the investment horizon of 90 days Polar Power is expected to generate 3.15 times more return on investment than Hubbell. However, Polar Power is 3.15 times more volatile than Hubbell. It trades about 0.02 of its potential returns per unit of risk. Hubbell is currently generating about 0.02 per unit of risk. If you would invest  315.00  in Polar Power on November 28, 2024 and sell it today you would lose (35.00) from holding Polar Power or give up 11.11% of portfolio value over 90 days.

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

Polar Power  vs.  Hubbell

Polar Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polar Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Polar Power is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Hubbell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hubbell has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Polar Power and Hubbell

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

The idea behind Polar Power and Hubbell 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.