Correlation Between Sothebys and Palomar Holdings

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

By analyzing existing cross correlation between Sothebys 7375 percent and Palomar Holdings, you can compare the effects of market volatilities on Sothebys and Palomar 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 Sothebys with a short position of Palomar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sothebys and Palomar Holdings.

Diversification Opportunities for Sothebys and Palomar Holdings

-0.23

Correlation Coefficient

Sothebys  Palomar Holdings

Very good diversification

The 3 months correlation between Sothebys and Palomar is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sothebys 7375 percent and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and Sothebys 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 Sothebys 7375 percent are associated (or correlated) with Palomar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palomar Holdings has no effect on the direction of Sothebys i.e., Sothebys and Palomar Holdings go up and down completely randomly.

Pair Corralation between Sothebys and Palomar Holdings

Assuming the 90 days trading horizon Sothebys 7375 percent is expected to under-perform the Palomar Holdings. But the bond apears to be less risky and, when comparing its historical volatility, Sothebys 7375 percent is 1.21 times less risky than Palomar Holdings. The bond trades about -0.03 of its potential returns per unit of risk. The Palomar Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,482  in Palomar Holdings on September 27, 2024 and sell it today you would earn a total of  1,018  from holding Palomar Holdings or generate 10.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.94%
Values	Daily Returns

Sothebys 7375 percent  vs.  Palomar Holdings

Sothebys 7375 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sothebys 7375 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sothebys is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Palomar Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating primary indicators, Palomar Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sothebys and Palomar Holdings

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

The idea behind Sothebys 7375 percent and Palomar Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.