Correlation Between Pekin Life and Palomar Holdings
Can any of the company-specific risk be diversified away by investing in both Pekin Life 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 Pekin Life and Palomar Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pekin Life Insurance and Palomar Holdings, you can compare the effects of market volatilities on Pekin Life 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 Pekin Life with a short position of Palomar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pekin Life and Palomar Holdings.
Diversification Opportunities for Pekin Life and Palomar Holdings
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pekin and Palomar is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pekin Life Insurance and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and Pekin Life 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 Pekin Life Insurance 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 Pekin Life i.e., Pekin Life and Palomar Holdings go up and down completely randomly.
Pair Corralation between Pekin Life and Palomar Holdings
Given the investment horizon of 90 days Pekin Life is expected to generate 5.53 times less return on investment than Palomar Holdings. But when comparing it to its historical volatility, Pekin Life Insurance is 8.65 times less risky than Palomar Holdings. It trades about 0.13 of its potential returns per unit of risk. Palomar Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,810 in Palomar Holdings on August 31, 2024 and sell it today you would earn a total of 1,034 from holding Palomar Holdings or generate 10.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pekin Life Insurance vs. Palomar Holdings
Performance |
| Timeline |
| Pekin Life Insurance |
| Palomar Holdings |
Pekin Life and Palomar Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pekin Life and Palomar Holdings
The main advantage of trading using opposite Pekin Life and Palomar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pekin Life 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.| Pekin Life vs. HUMANA INC | Pekin Life vs. SCOR PK | Pekin Life vs. Aquagold International | Pekin Life vs. Thrivent High Yield |
| 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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