Correlation Between Palomar Holdings and ESGEN Acquisition
Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and ESGEN Acquisition 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 ESGEN Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and ESGEN Acquisition Corp, you can compare the effects of market volatilities on Palomar Holdings and ESGEN Acquisition 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 ESGEN Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and ESGEN Acquisition.
Diversification Opportunities for Palomar Holdings and ESGEN Acquisition
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Palomar and ESGEN is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and ESGEN Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESGEN Acquisition 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 ESGEN Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESGEN Acquisition Corp has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and ESGEN Acquisition go up and down completely randomly.
Pair Corralation between Palomar Holdings and ESGEN Acquisition
Given the investment horizon of 90 days Palomar Holdings is expected to generate 3.38 times more return on investment than ESGEN Acquisition. However, Palomar Holdings is 3.38 times more volatile than ESGEN Acquisition Corp. It trades about 0.07 of its potential returns per unit of risk. ESGEN Acquisition Corp is currently generating about 0.06 per unit of risk. If you would invest 5,188 in Palomar Holdings on August 30, 2024 and sell it today you would earn a total of 5,656 from holding Palomar Holdings or generate 109.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 31.31% |
| Values | Daily Returns |
Palomar Holdings vs. ESGEN Acquisition Corp
Performance |
| Timeline |
| Palomar Holdings |
| ESGEN Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Palomar Holdings and ESGEN Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palomar Holdings and ESGEN Acquisition
The main advantage of trading using opposite Palomar Holdings and ESGEN Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, ESGEN Acquisition 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 ESGEN Acquisition will offset losses from the drop in ESGEN Acquisition's long position.| Palomar Holdings vs. Horace Mann Educators | Palomar Holdings vs. Kemper | Palomar Holdings vs. RLI Corp | Palomar Holdings vs. Global Indemnity PLC |
| ESGEN Acquisition vs. Boston Beer | ESGEN Acquisition vs. Vera Bradley | ESGEN Acquisition vs. RBC Bearings Incorporated | ESGEN Acquisition vs. SNDL Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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