Correlation Between ULT and Polygon
Can any of the company-specific risk be diversified away by investing in both ULT and Polygon 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 ULT and Polygon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ULT and Polygon, you can compare the effects of market volatilities on ULT and Polygon 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 ULT with a short position of Polygon. Check out your portfolio center. Please also check ongoing floating volatility patterns of ULT and Polygon.
Diversification Opportunities for ULT and Polygon
Pay attention - limited upside
The 3 months correlation between ULT and Polygon is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding ULT and Polygon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygon and ULT 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 ULT are associated (or correlated) with Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygon has no effect on the direction of ULT i.e., ULT and Polygon go up and down completely randomly.
Pair Corralation between ULT and Polygon
If you would invest 101.00 in Polygon on December 29, 2023 and sell it today you would lose (1.00) from holding Polygon or give up 0.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 4.55% |
Values | Daily Returns |
ULT vs. Polygon
Performance |
Timeline |
ULT |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Polygon |
ULT and Polygon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ULT and Polygon
The main advantage of trading using opposite ULT and Polygon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULT position performs unexpectedly, Polygon 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 Polygon will offset losses from the drop in Polygon's long position.The idea behind ULT and Polygon 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |