Correlation Between Commodities Strategy and Polen Small

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

By analyzing existing cross correlation between Commodities Strategy Fund and Polen Small Pany, you can compare the effects of market volatilities on Commodities Strategy and Polen Small 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 Commodities Strategy with a short position of Polen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Polen Small.

Diversification Opportunities for Commodities Strategy and Polen Small

0.04

Correlation Coefficient

Commodities Strategy  Polen Small

Significant diversification

The 3 months correlation between Commodities and Polen is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund and Polen Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Small Pany and Commodities Strategy 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 Commodities Strategy Fund are associated (or correlated) with Polen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Small Pany has no effect on the direction of Commodities Strategy i.e., Commodities Strategy and Polen Small go up and down completely randomly.

Pair Corralation between Commodities Strategy and Polen Small

Assuming the 90 days horizon Commodities Strategy Fund is expected to under-perform the Polen Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Commodities Strategy Fund is 1.2 times less risky than Polen Small. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Polen Small Pany is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,396  in Polen Small Pany on September 13, 2024 and sell it today you would earn a total of  203.00  from holding Polen Small Pany or generate 14.54% return on investment over 90 days.

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

Commodities Strategy Fund  vs.  Polen Small Pany

Commodities Strategy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Commodities Strategy Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Commodities Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Polen Small Pany

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Polen Small Pany are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Polen Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commodities Strategy and Polen Small

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

The idea behind Commodities Strategy Fund and Polen Small Pany 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.