Correlation Between Palomar Holdings and BTU Metals
Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and BTU Metals 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 Palomar Holdings and BTU Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and BTU Metals Corp, you can compare the effects of market volatilities on Palomar Holdings and BTU Metals 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 Palomar Holdings with a short position of BTU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and BTU Metals.
Diversification Opportunities for Palomar Holdings and BTU Metals
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Palomar and BTU is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and BTU Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTU Metals Corp and Palomar Holdings 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 Palomar Holdings are associated (or correlated) with BTU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTU Metals Corp has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and BTU Metals go up and down completely randomly.
Pair Corralation between Palomar Holdings and BTU Metals
Given the investment horizon of 90 days Palomar Holdings is expected to generate 0.24 times more return on investment than BTU Metals. However, Palomar Holdings is 4.22 times less risky than BTU Metals. It trades about 0.1 of its potential returns per unit of risk. BTU Metals Corp is currently generating about 0.02 per unit of risk. If you would invest 8,465 in Palomar Holdings on September 1, 2024 and sell it today you would earn a total of 2,365 from holding Palomar Holdings or generate 27.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Palomar Holdings vs. BTU Metals Corp
Performance |
| Timeline |
| Palomar Holdings |
| BTU Metals Corp |
Palomar Holdings and BTU Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palomar Holdings and BTU Metals
The main advantage of trading using opposite Palomar Holdings and BTU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, BTU Metals 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 BTU Metals will offset losses from the drop in BTU Metals' long position.| Palomar Holdings vs. Horace Mann Educators | Palomar Holdings vs. Kemper | Palomar Holdings vs. RLI Corp | Palomar Holdings vs. Global Indemnity PLC |
| BTU Metals vs. Alaska Air Group | BTU Metals vs. Xtant Medical Holdings | BTU Metals vs. Westinghouse Air Brake | BTU Metals vs. AerSale Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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