Correlation Between Palomar Holdings and Dayforce

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

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

Diversification Opportunities for Palomar Holdings and Dayforce

-0.88

Correlation Coefficient

Palomar Holdings  Dayforce

Pay attention - limited upside

The 3 months correlation between Palomar and Dayforce is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Dayforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dayforce 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 Dayforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dayforce has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Dayforce go up and down completely randomly.

Pair Corralation between Palomar Holdings and Dayforce

Given the investment horizon of 90 days Palomar Holdings is expected to generate 1.28 times more return on investment than Dayforce. However, Palomar Holdings is 1.28 times more volatile than Dayforce. It trades about 0.15 of its potential returns per unit of risk. Dayforce is currently generating about -0.17 per unit of risk. If you would invest  10,257  in Palomar Holdings on December 22, 2024 and sell it today you would earn a total of  2,675  from holding Palomar Holdings or generate 26.08% return on investment over 90 days.

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

Palomar Holdings  vs.  Dayforce

Palomar Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 12 (%) 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.

Dayforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dayforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Palomar Holdings and Dayforce

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

The idea behind Palomar Holdings and Dayforce 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.