Correlation Between Palomar Holdings and Global Indemnity
Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and Global Indemnity 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 Global Indemnity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and Global Indemnity PLC, you can compare the effects of market volatilities on Palomar Holdings and Global Indemnity 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 Global Indemnity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and Global Indemnity.
Diversification Opportunities for Palomar Holdings and Global Indemnity
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Palomar and Global is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Global Indemnity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Indemnity PLC 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 Global Indemnity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Indemnity PLC has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Global Indemnity go up and down completely randomly.
Pair Corralation between Palomar Holdings and Global Indemnity
Given the investment horizon of 90 days Palomar Holdings is expected to generate 13.79 times less return on investment than Global Indemnity. But when comparing it to its historical volatility, Palomar Holdings is 22.72 times less risky than Global Indemnity. It trades about 0.08 of its potential returns per unit of risk. Global Indemnity PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,598 in Global Indemnity PLC on August 31, 2024 and sell it today you would earn a total of 1,041 from holding Global Indemnity PLC or generate 40.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.13% |
| Values | Daily Returns |
Palomar Holdings vs. Global Indemnity PLC
Performance |
| Timeline |
| Palomar Holdings |
| Global Indemnity PLC |
Palomar Holdings and Global Indemnity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palomar Holdings and Global Indemnity
The main advantage of trading using opposite Palomar Holdings and Global Indemnity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, Global Indemnity 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 Global Indemnity will offset losses from the drop in Global Indemnity's long position.| Palomar Holdings vs. Horace Mann Educators | Palomar Holdings vs. Kemper | Palomar Holdings vs. RLI Corp | Palomar Holdings vs. Global Indemnity PLC |
| Global Indemnity vs. Progressive Corp | Global Indemnity vs. Chubb | Global Indemnity vs. The Allstate | Global Indemnity vs. CNA Financial |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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