Correlation Between Polaris Industries and Marine Products

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

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

Diversification Opportunities for Polaris Industries and Marine Products

-0.39

Correlation Coefficient

Polaris Industries  Marine Products

Very good diversification

The 3 months correlation between Polaris and Marine is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Industries and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Polaris Industries i.e., Polaris Industries and Marine Products go up and down completely randomly.

Pair Corralation between Polaris Industries and Marine Products

Considering the 90-day investment horizon Polaris Industries is expected to under-perform the Marine Products. In addition to that, Polaris Industries is 1.5 times more volatile than Marine Products. It trades about -0.17 of its total potential returns per unit of risk. Marine Products is currently generating about 0.05 per unit of volatility. If you would invest  955.00  in Marine Products on August 30, 2024 and sell it today you would earn a total of  31.00  from holding Marine Products or generate 3.25% 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.  Marine Products

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 December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Marine Products

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marine Products are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Marine Products may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Polaris Industries and Marine Products

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

The idea behind Polaris Industries and Marine Products 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.