Correlation Between Palomar Holdings and Supercom
Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and Supercom 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 Supercom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and Supercom, you can compare the effects of market volatilities on Palomar Holdings and Supercom 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 Supercom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and Supercom.
Diversification Opportunities for Palomar Holdings and Supercom
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Palomar and Supercom is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Supercom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercom 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 Supercom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercom has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Supercom go up and down completely randomly.
Pair Corralation between Palomar Holdings and Supercom
Given the investment horizon of 90 days Palomar Holdings is expected to generate 0.22 times more return on investment than Supercom. However, Palomar Holdings is 4.53 times less risky than Supercom. It trades about 0.08 of its potential returns per unit of risk. Supercom is currently generating about -0.01 per unit of risk. If you would invest 5,882 in Palomar Holdings on September 4, 2024 and sell it today you would earn a total of 5,021 from holding Palomar Holdings or generate 85.36% 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. Supercom
Performance |
| Timeline |
| Palomar Holdings |
| Supercom |
Palomar Holdings and Supercom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palomar Holdings and Supercom
The main advantage of trading using opposite Palomar Holdings and Supercom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, Supercom 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 Supercom will offset losses from the drop in Supercom's long position.| Palomar Holdings vs. Horace Mann Educators | Palomar Holdings vs. Kemper | Palomar Holdings vs. RLI Corp | Palomar Holdings vs. Global Indemnity PLC |
| Supercom vs. Zedcor Inc | Supercom vs. SSC Security Services | Supercom vs. Blue Line Protection | Supercom vs. Guardforce AI Co |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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