Correlation Between Under Armour and Palomar Holdings
Can any of the company-specific risk be diversified away by investing in both Under Armour and Palomar Holdings 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 Under Armour and Palomar Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Under Armour C and Palomar Holdings, you can compare the effects of market volatilities on Under Armour and Palomar Holdings 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 Under Armour with a short position of Palomar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and Palomar Holdings.
Diversification Opportunities for Under Armour and Palomar Holdings
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Under and Palomar is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and Under Armour 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 Under Armour C are associated (or correlated) with Palomar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palomar Holdings has no effect on the direction of Under Armour i.e., Under Armour and Palomar Holdings go up and down completely randomly.
Pair Corralation between Under Armour and Palomar Holdings
Allowing for the 90-day total investment horizon Under Armour is expected to generate 19.72 times less return on investment than Palomar Holdings. In addition to that, Under Armour is 1.15 times more volatile than Palomar Holdings. It trades about 0.0 of its total potential returns per unit of risk. Palomar Holdings is currently generating about 0.08 per unit of volatility. If you would invest 4,688 in Palomar Holdings on September 24, 2024 and sell it today you would earn a total of 5,569 from holding Palomar Holdings or generate 118.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Under Armour C vs. Palomar Holdings
Performance |
Timeline |
Under Armour C |
Palomar Holdings |
Under Armour and Palomar Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Under Armour and Palomar Holdings
The main advantage of trading using opposite Under Armour and Palomar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour position performs unexpectedly, Palomar Holdings 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 Palomar Holdings will offset losses from the drop in Palomar Holdings' long position.Under Armour vs. Amer Sports, | ||
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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