Correlation Between Boot Barn and Palomar Holdings

Can any of the company-specific risk be diversified away by investing in both Boot Barn 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 Boot Barn and Palomar Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boot Barn Holdings and Palomar Holdings, you can compare the effects of market volatilities on Boot Barn 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 Boot Barn with a short position of Palomar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boot Barn and Palomar Holdings.

Diversification Opportunities for Boot Barn and Palomar Holdings

-0.86

Correlation Coefficient

Boot Barn  Palomar Holdings

Pay attention - limited upside

The 3 months correlation between Boot and Palomar is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Boot Barn Holdings and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and Boot Barn 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 Boot Barn Holdings 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 Boot Barn i.e., Boot Barn and Palomar Holdings go up and down completely randomly.

Pair Corralation between Boot Barn and Palomar Holdings

Given the investment horizon of 90 days Boot Barn Holdings is expected to under-perform the Palomar Holdings. In addition to that, Boot Barn is 1.09 times more volatile than Palomar Holdings. It trades about -0.19 of its total potential returns per unit of risk. Palomar Holdings is currently generating about 0.15 per unit of volatility. If you would invest  10,381  in Palomar Holdings on December 19, 2024 and sell it today you would earn a total of  2,636  from holding Palomar Holdings or generate 25.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Boot Barn Holdings  vs.  Palomar Holdings

Boot Barn Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boot Barn Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Palomar Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating primary indicators, Palomar Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Boot Barn and Palomar Holdings

The main advantage of trading using opposite Boot Barn and Palomar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boot Barn 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.

The idea behind Boot Barn Holdings and Palomar Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.