Correlation Between Polygon and VEST

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Can any of the company-specific risk be diversified away by investing in both Polygon and VEST 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 VEST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polygon and VEST, you can compare the effects of market volatilities on Polygon and VEST 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 VEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polygon and VEST.

Diversification Opportunities for Polygon and VEST

-0.75
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Polygon and VEST is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Polygon and VEST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VEST 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 VEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VEST has no effect on the direction of Polygon i.e., Polygon and VEST go up and down completely randomly.

Pair Corralation between Polygon and VEST

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 Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy4.55%
ValuesDaily Returns

Polygon  vs.  VEST

 Performance 
       Timeline  
Polygon 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Polygon are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Polygon may actually be approaching a critical reversion point that can send shares even higher in April 2024.
VEST 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days VEST has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, VEST is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Polygon and VEST Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polygon and VEST

The main advantage of trading using opposite Polygon and VEST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polygon position performs unexpectedly, VEST 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 VEST will offset losses from the drop in VEST's long position.
The idea behind Polygon and VEST 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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