Correlation Between Boot Barn and Palomar Holdings
Can any of the company-specific risk be diversified away by investing in both Boot Barn 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 Boot Barn and Palomar Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boot Barn Holdings and Palomar Holdings, you can compare the effects of market volatilities on Boot Barn 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 Boot Barn with a short position of Palomar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boot Barn and Palomar Holdings.
Diversification Opportunities for Boot Barn and Palomar Holdings
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Boot and Palomar is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Boot Barn Holdings and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and Boot Barn 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 Boot Barn Holdings 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 Boot Barn i.e., Boot Barn and Palomar Holdings go up and down completely randomly.
Pair Corralation between Boot Barn and Palomar Holdings
Given the investment horizon of 90 days Boot Barn Holdings is expected to generate 1.47 times more return on investment than Palomar Holdings. However, Boot Barn is 1.47 times more volatile than Palomar Holdings. It trades about 0.14 of its potential returns per unit of risk. Palomar Holdings is currently generating about -0.07 per unit of risk. If you would invest 13,411 in Boot Barn Holdings on September 19, 2024 and sell it today you would earn a total of 1,146 from holding Boot Barn Holdings or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boot Barn Holdings vs. Palomar Holdings
Performance |
| Timeline |
| Boot Barn Holdings |
| Palomar Holdings |
Boot Barn and Palomar Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boot Barn and Palomar Holdings
The main advantage of trading using opposite Boot Barn and Palomar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boot Barn 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.| Boot Barn vs. Capri Holdings | Boot Barn vs. Movado Group | Boot Barn vs. Tapestry | Boot Barn vs. Brilliant Earth Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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