Correlation Between Palomar Holdings and ICC Holdings
Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and ICC Holdings 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 Palomar Holdings and ICC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and ICC Holdings, you can compare the effects of market volatilities on Palomar Holdings and ICC Holdings 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 Palomar Holdings with a short position of ICC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and ICC Holdings.
Diversification Opportunities for Palomar Holdings and ICC Holdings
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Palomar and ICC is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and ICC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICC Holdings and Palomar Holdings 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 Palomar Holdings are associated (or correlated) with ICC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICC Holdings has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and ICC Holdings go up and down completely randomly.
Pair Corralation between Palomar Holdings and ICC Holdings
Given the investment horizon of 90 days Palomar Holdings is expected to generate 4.26 times more return on investment than ICC Holdings. However, Palomar Holdings is 4.26 times more volatile than ICC Holdings. It trades about 0.11 of its potential returns per unit of risk. ICC Holdings is currently generating about 0.04 per unit of risk. If you would invest 9,483 in Palomar Holdings on September 13, 2024 and sell it today you would earn a total of 1,362 from holding Palomar Holdings or generate 14.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 87.3% |
Values | Daily Returns |
Palomar Holdings vs. ICC Holdings
Performance |
Timeline |
Palomar Holdings |
ICC Holdings |
Palomar Holdings and ICC Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Palomar Holdings and ICC Holdings
The main advantage of trading using opposite Palomar Holdings and ICC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, ICC Holdings 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 ICC Holdings will offset losses from the drop in ICC Holdings' long position.Palomar Holdings vs. Progressive Corp | Palomar Holdings vs. Chubb | Palomar Holdings vs. Cincinnati Financial | Palomar Holdings vs. W R Berkley |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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