Correlation Between Kemper and Palomar Holdings
Can any of the company-specific risk be diversified away by investing in both Kemper 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 Kemper and Palomar Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kemper and Palomar Holdings, you can compare the effects of market volatilities on Kemper 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 Kemper with a short position of Palomar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kemper and Palomar Holdings.
Diversification Opportunities for Kemper and Palomar Holdings
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kemper and Palomar is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Kemper and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and Kemper 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 Kemper 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 Kemper i.e., Kemper and Palomar Holdings go up and down completely randomly.
Pair Corralation between Kemper and Palomar Holdings
Given the investment horizon of 90 days Kemper is expected to generate 1.02 times less return on investment than Palomar Holdings. But when comparing it to its historical volatility, Kemper is 1.53 times less risky than Palomar Holdings. It trades about 0.41 of its potential returns per unit of risk. Palomar Holdings is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 9,419 in Palomar Holdings on August 24, 2024 and sell it today you would earn a total of 1,448 from holding Palomar Holdings or generate 15.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kemper vs. Palomar Holdings
Performance |
| Timeline |
| Kemper |
| Palomar Holdings |
Kemper and Palomar Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kemper and Palomar Holdings
The main advantage of trading using opposite Kemper and Palomar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kemper 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.| Kemper vs. Amtech Systems | Kemper vs. Gold Fields Ltd | Kemper vs. Aegean Airlines SA | Kemper vs. Merck Company |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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