Correlation Between Bowhead Specialty and Palomar Holdings
Can any of the company-specific risk be diversified away by investing in both Bowhead Specialty 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 Bowhead Specialty and Palomar Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bowhead Specialty Holdings and Palomar Holdings, you can compare the effects of market volatilities on Bowhead Specialty 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 Bowhead Specialty with a short position of Palomar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and Palomar Holdings.
Diversification Opportunities for Bowhead Specialty and Palomar Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bowhead and Palomar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and Bowhead Specialty 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 Bowhead Specialty 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 Bowhead Specialty i.e., Bowhead Specialty and Palomar Holdings go up and down completely randomly.
Pair Corralation between Bowhead Specialty and Palomar Holdings
Considering the 90-day investment horizon Bowhead Specialty is expected to generate 1.53 times less return on investment than Palomar Holdings. But when comparing it to its historical volatility, Bowhead Specialty Holdings is 1.05 times less risky than Palomar Holdings. It trades about 0.15 of its potential returns per unit of risk. Palomar Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 13,409 in Palomar Holdings on January 16, 2025 and sell it today you would earn a total of 2,025 from holding Palomar Holdings or generate 15.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bowhead Specialty Holdings vs. Palomar Holdings
Performance |
| Timeline |
| Bowhead Specialty |
| Palomar Holdings |
Bowhead Specialty and Palomar Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowhead Specialty and Palomar Holdings
The main advantage of trading using opposite Bowhead Specialty and Palomar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowhead Specialty 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.| Bowhead Specialty vs. MGIC Investment Corp | Bowhead Specialty vs. Cansortium | Bowhead Specialty vs. Boston Beer | Bowhead Specialty vs. Kinsale Capital Group |
| Palomar Holdings vs. Horace Mann Educators | Palomar Holdings vs. Kemper | Palomar Holdings vs. RLI Corp | Palomar Holdings vs. Global Indemnity PLC |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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