Correlation Between Polygon and Hive
Can any of the company-specific risk be diversified away by investing in both Polygon and Hive 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 Polygon and Hive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polygon and Hive, you can compare the effects of market volatilities on Polygon and Hive 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 Polygon with a short position of Hive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polygon and Hive.
Diversification Opportunities for Polygon and Hive
Poor diversification
The 3 months correlation between Polygon and Hive is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Polygon and Hive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hive and Polygon 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 Polygon are associated (or correlated) with Hive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hive has no effect on the direction of Polygon i.e., Polygon and Hive go up and down completely randomly.
Pair Corralation between Polygon and Hive
Assuming the 90 days trading horizon Polygon is expected to generate 1.02 times more return on investment than Hive. However, Polygon is 1.02 times more volatile than Hive. It trades about 0.02 of its potential returns per unit of risk. Hive is currently generating about 0.01 per unit of risk. If you would invest 89.00 in Polygon on January 27, 2024 and sell it today you would lose (17.00) from holding Polygon or give up 19.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Polygon vs. Hive
Performance |
Timeline |
Polygon |
Hive |
Polygon and Hive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Polygon and Hive
The main advantage of trading using opposite Polygon and Hive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polygon position performs unexpectedly, Hive 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 Hive will offset losses from the drop in Hive's long position.The idea behind Polygon and Hive 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Share Portfolio Track or share privately all of your investments from the convenience of any device | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |