Correlation Between Polaris Industries and Sportsmans

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

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

Diversification Opportunities for Polaris Industries and Sportsmans

0.74

Correlation Coefficient

Polaris Industries  Sportsmans

Poor diversification

The 3 months correlation between Polaris and Sportsmans is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Industries and Sportsmans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans 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 Sportsmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans has no effect on the direction of Polaris Industries i.e., Polaris Industries and Sportsmans go up and down completely randomly.

Pair Corralation between Polaris Industries and Sportsmans

Considering the 90-day investment horizon Polaris Industries is expected to generate 1.53 times less return on investment than Sportsmans. But when comparing it to its historical volatility, Polaris Industries is 1.35 times less risky than Sportsmans. It trades about 0.21 of its potential returns per unit of risk. Sportsmans is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  169.00  in Sportsmans on May 3, 2025 and sell it today you would earn a total of  168.00  from holding Sportsmans or generate 99.41% 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.  Sportsmans

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.

Sportsmans

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sportsmans are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Sportsmans demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polaris Industries and Sportsmans

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

The idea behind Polaris Industries and Sportsmans 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.