Correlation Between Palomar Holdings and NGK Insulators
Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and NGK Insulators 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 NGK Insulators into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and NGK Insulators, you can compare the effects of market volatilities on Palomar Holdings and NGK Insulators 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 NGK Insulators. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and NGK Insulators.
Diversification Opportunities for Palomar Holdings and NGK Insulators
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Palomar and NGK is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and NGK Insulators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGK Insulators 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 NGK Insulators. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGK Insulators has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and NGK Insulators go up and down completely randomly.
Pair Corralation between Palomar Holdings and NGK Insulators
Given the investment horizon of 90 days Palomar Holdings is expected to generate 1.18 times more return on investment than NGK Insulators. However, Palomar Holdings is 1.18 times more volatile than NGK Insulators. It trades about 0.11 of its potential returns per unit of risk. NGK Insulators is currently generating about 0.05 per unit of risk. If you would invest 5,827 in Palomar Holdings on September 12, 2024 and sell it today you would earn a total of 4,872 from holding Palomar Holdings or generate 83.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 79.84% |
| Values | Daily Returns |
Palomar Holdings vs. NGK Insulators
Performance |
| Timeline |
| Palomar Holdings |
| NGK Insulators |
Palomar Holdings and NGK Insulators Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palomar Holdings and NGK Insulators
The main advantage of trading using opposite Palomar Holdings and NGK Insulators positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, NGK Insulators 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 NGK Insulators will offset losses from the drop in NGK Insulators' long position.| Palomar Holdings vs. Aeye Inc | Palomar Holdings vs. Ep Emerging Markets | Palomar Holdings vs. LiCycle Holdings Corp | Palomar Holdings vs. SEI Investments |
| NGK Insulators vs. NI Holdings | NGK Insulators vs. Pekin Life Insurance | NGK Insulators vs. Palomar Holdings | NGK Insulators vs. Siriuspoint |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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