Correlation Between Palomar Holdings and IHeartMedia
Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and IHeartMedia 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 IHeartMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and iHeartMedia, you can compare the effects of market volatilities on Palomar Holdings and IHeartMedia 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 IHeartMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and IHeartMedia.
Diversification Opportunities for Palomar Holdings and IHeartMedia
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Palomar and IHeartMedia is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and iHeartMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia 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 IHeartMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iHeartMedia has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and IHeartMedia go up and down completely randomly.
Pair Corralation between Palomar Holdings and IHeartMedia
Given the investment horizon of 90 days Palomar Holdings is expected to generate 0.37 times more return on investment than IHeartMedia. However, Palomar Holdings is 2.71 times less risky than IHeartMedia. It trades about 0.19 of its potential returns per unit of risk. iHeartMedia is currently generating about -0.22 per unit of risk. If you would invest 10,381 in Palomar Holdings on October 20, 2024 and sell it today you would earn a total of 656.00 from holding Palomar Holdings or generate 6.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Palomar Holdings vs. iHeartMedia
Performance |
| Timeline |
| Palomar Holdings |
| iHeartMedia |
Palomar Holdings and IHeartMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palomar Holdings and IHeartMedia
The main advantage of trading using opposite Palomar Holdings and IHeartMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, IHeartMedia 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 IHeartMedia will offset losses from the drop in IHeartMedia's long position.| Palomar Holdings vs. Horace Mann Educators | Palomar Holdings vs. Kemper | Palomar Holdings vs. RLI Corp | Palomar Holdings vs. Global Indemnity PLC |
| IHeartMedia vs. RTL Group SA | IHeartMedia vs. ITV plc | IHeartMedia vs. ITV PLC ADR | IHeartMedia vs. ProSiebenSat1 Media AG |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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