Correlation Between Palomar Holdings and Bt Brands

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

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

Diversification Opportunities for Palomar Holdings and Bt Brands

-0.39

Correlation Coefficient

Palomar Holdings  Bt Brands

Very good diversification

The 3 months correlation between Palomar and BTBD is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands 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 Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Bt Brands go up and down completely randomly.

Pair Corralation between Palomar Holdings and Bt Brands

Given the investment horizon of 90 days Palomar Holdings is expected to generate 0.43 times more return on investment than Bt Brands. However, Palomar Holdings is 2.34 times less risky than Bt Brands. It trades about 0.08 of its potential returns per unit of risk. Bt Brands is currently generating about 0.02 per unit of risk. If you would invest  4,450  in Palomar Holdings on September 19, 2024 and sell it today you would earn a total of  6,024  from holding Palomar Holdings or generate 135.37% return on investment over 90 days.

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

Palomar Holdings  vs.  Bt Brands

Palomar Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Palomar Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Bt Brands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bt Brands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Bt Brands is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Palomar Holdings and Bt Brands

The main advantage of trading using opposite Palomar Holdings and Bt Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, Bt Brands 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 Bt Brands will offset losses from the drop in Bt Brands' long position.

The idea behind Palomar Holdings and Bt Brands 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.