Correlation Between Polaris Industries and Rush Enterprises

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

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

Diversification Opportunities for Polaris Industries and Rush Enterprises

0.78

Correlation Coefficient

Polaris Industries  Rush Enterprises

Poor diversification

The 3 months correlation between Polaris and Rush is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Industries and Rush Enterprises A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rush Enterprises A 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 Rush Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rush Enterprises A has no effect on the direction of Polaris Industries i.e., Polaris Industries and Rush Enterprises go up and down completely randomly.

Pair Corralation between Polaris Industries and Rush Enterprises

Considering the 90-day investment horizon Polaris Industries is expected to generate 2.03 times more return on investment than Rush Enterprises. However, Polaris Industries is 2.03 times more volatile than Rush Enterprises A. It trades about 0.21 of its potential returns per unit of risk. Rush Enterprises A is currently generating about 0.11 per unit of risk. If you would invest  3,334  in Polaris Industries on May 3, 2025 and sell it today you would earn a total of  1,957  from holding Polaris Industries or generate 58.7% return on investment over 90 days.

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

Polaris Industries  vs.  Rush Enterprises A

Polaris Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Polaris Industries are ranked lower than 16 (%) 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.

Rush Enterprises A

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rush Enterprises A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Rush Enterprises sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polaris Industries and Rush Enterprises

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

The idea behind Polaris Industries and Rush Enterprises A 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.