Correlation Between Palomar Holdings and BRP
Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and BRP 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 BRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and BRP Inc, you can compare the effects of market volatilities on Palomar Holdings and BRP 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 BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and BRP.
Diversification Opportunities for Palomar Holdings and BRP
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Palomar and BRP is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc 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 BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and BRP go up and down completely randomly.
Pair Corralation between Palomar Holdings and BRP
Given the investment horizon of 90 days Palomar Holdings is expected to generate 1.27 times less return on investment than BRP. But when comparing it to its historical volatility, Palomar Holdings is 1.4 times less risky than BRP. It trades about 0.2 of its potential returns per unit of risk. BRP Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,813 in BRP Inc on September 13, 2024 and sell it today you would earn a total of 462.00 from holding BRP Inc or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Palomar Holdings vs. BRP Inc
Performance |
| Timeline |
| Palomar Holdings |
| BRP Inc |
Palomar Holdings and BRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palomar Holdings and BRP
The main advantage of trading using opposite Palomar Holdings and BRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, BRP 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 BRP will offset losses from the drop in BRP's long position.| Palomar Holdings vs. Progressive Corp | Palomar Holdings vs. Chubb | Palomar Holdings vs. Cincinnati Financial | Palomar Holdings vs. W R Berkley |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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