Correlation Between 1StdibsCom and Polaris Industries

Can any of the company-specific risk be diversified away by investing in both 1StdibsCom and Polaris 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 1StdibsCom and Polaris Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1StdibsCom and Polaris Industries, you can compare the effects of market volatilities on 1StdibsCom and Polaris 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 1StdibsCom with a short position of Polaris Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1StdibsCom and Polaris Industries.

Diversification Opportunities for 1StdibsCom and Polaris Industries

0.65

Correlation Coefficient

1StdibsCom  Polaris Industries

Poor diversification

The 3 months correlation between 1StdibsCom and Polaris is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding 1StdibsCom and Polaris Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polaris Industries and 1StdibsCom 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 1StdibsCom are associated (or correlated) with Polaris Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polaris Industries has no effect on the direction of 1StdibsCom i.e., 1StdibsCom and Polaris Industries go up and down completely randomly.

Pair Corralation between 1StdibsCom and Polaris Industries

Given the investment horizon of 90 days 1StdibsCom is expected to generate 3.49 times less return on investment than Polaris Industries. But when comparing it to its historical volatility, 1StdibsCom is 1.08 times less risky than Polaris Industries. It trades about 0.07 of its potential returns per unit of risk. Polaris Industries is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,316  in Polaris Industries on April 28, 2025 and sell it today you would earn a total of  1,708  from holding Polaris Industries or generate 51.51% return on investment over 90 days.

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

1StdibsCom  vs.  Polaris Industries

1StdibsCom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 1StdibsCom are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, 1StdibsCom unveiled solid returns over the last few months and may actually be approaching a breakup point.

Polaris Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Polaris Industries are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, Polaris Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 1StdibsCom and Polaris Industries

The main advantage of trading using opposite 1StdibsCom and Polaris Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1StdibsCom position performs unexpectedly, Polaris 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 Polaris Industries will offset losses from the drop in Polaris Industries' long position.

The idea behind 1StdibsCom and Polaris 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.