Correlation Between Palomar Holdings and Sweetgreen
Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and Sweetgreen 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 Sweetgreen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and Sweetgreen, you can compare the effects of market volatilities on Palomar Holdings and Sweetgreen 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 Sweetgreen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and Sweetgreen.
Diversification Opportunities for Palomar Holdings and Sweetgreen
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Palomar and Sweetgreen is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen 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 Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Sweetgreen go up and down completely randomly.
Pair Corralation between Palomar Holdings and Sweetgreen
Given the investment horizon of 90 days Palomar Holdings is expected to generate 2.11 times less return on investment than Sweetgreen. But when comparing it to its historical volatility, Palomar Holdings is 1.88 times less risky than Sweetgreen. It trades about 0.07 of its potential returns per unit of risk. Sweetgreen is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,093 in Sweetgreen on August 29, 2024 and sell it today you would earn a total of 3,234 from holding Sweetgreen or generate 295.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Palomar Holdings vs. Sweetgreen
Performance |
| Timeline |
| Palomar Holdings |
| Sweetgreen |
Palomar Holdings and Sweetgreen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palomar Holdings and Sweetgreen
The main advantage of trading using opposite Palomar Holdings and Sweetgreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, Sweetgreen 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 Sweetgreen will offset losses from the drop in Sweetgreen's long position.| Palomar Holdings vs. Horace Mann Educators | Palomar Holdings vs. Kemper | Palomar Holdings vs. RLI Corp | Palomar Holdings vs. Global Indemnity PLC |
| Sweetgreen vs. Jack In The | Sweetgreen vs. Potbelly Co | Sweetgreen vs. BJs Restaurants | Sweetgreen vs. One Group Hospitality |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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