Correlation Between Lindblad Expeditions and Palomar Holdings

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

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

Diversification Opportunities for Lindblad Expeditions and Palomar Holdings

0.75

Correlation Coefficient

Lindblad Expeditions  Palomar Holdings

Poor diversification

The 3 months correlation between Lindblad and Palomar is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lindblad Expeditions Holdings and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and Lindblad Expeditions 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 Lindblad Expeditions 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 Lindblad Expeditions i.e., Lindblad Expeditions and Palomar Holdings go up and down completely randomly.

Pair Corralation between Lindblad Expeditions and Palomar Holdings

Given the investment horizon of 90 days Lindblad Expeditions Holdings is expected to under-perform the Palomar Holdings. In addition to that, Lindblad Expeditions is 1.57 times more volatile than Palomar Holdings. It trades about -0.15 of its total potential returns per unit of risk. Palomar Holdings is currently generating about -0.09 per unit of volatility. If you would invest  10,813  in Palomar Holdings on October 4, 2024 and sell it today you would lose (468.00) from holding Palomar Holdings or give up 4.33% of portfolio value over 90 days.

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

Lindblad Expeditions Holdings  vs.  Palomar Holdings

Lindblad Expeditions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lindblad Expeditions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Palomar Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Palomar Holdings is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Lindblad Expeditions and Palomar Holdings

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

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.