Correlation Between Citizens and Palomar Holdings
Can any of the company-specific risk be diversified away by investing in both Citizens 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 Citizens and Palomar Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citizens and Palomar Holdings, you can compare the effects of market volatilities on Citizens 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 Citizens with a short position of Palomar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens and Palomar Holdings.
Diversification Opportunities for Citizens and Palomar Holdings
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Citizens and Palomar is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Citizens and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and Citizens 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 Citizens 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 Citizens i.e., Citizens and Palomar Holdings go up and down completely randomly.
Pair Corralation between Citizens and Palomar Holdings
Considering the 90-day investment horizon Citizens is expected to generate 1.1 times less return on investment than Palomar Holdings. In addition to that, Citizens is 1.05 times more volatile than Palomar Holdings. It trades about 0.16 of its total potential returns per unit of risk. Palomar Holdings is currently generating about 0.18 per unit of volatility. If you would invest 10,445 in Palomar Holdings on November 30, 2024 and sell it today you would earn a total of 2,421 from holding Palomar Holdings or generate 23.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citizens vs. Palomar Holdings
Performance |
| Timeline |
| Citizens |
| Palomar Holdings |
Citizens and Palomar Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citizens and Palomar Holdings
The main advantage of trading using opposite Citizens and Palomar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citizens 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.| Citizens vs. CNO Financial Group | Citizens vs. Brighthouse Financial | Citizens vs. FG Annuities Life | Citizens vs. Prudential PLC ADR |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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