Correlation Between Palomar Holdings and GE Vernova

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

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

Diversification Opportunities for Palomar Holdings and GE Vernova

-0.54

Correlation Coefficient

Palomar Holdings  GE Vernova

Excellent diversification

The 3 months correlation between Palomar and GEV is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC 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 GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and GE Vernova go up and down completely randomly.

Pair Corralation between Palomar Holdings and GE Vernova

Given the investment horizon of 90 days Palomar Holdings is expected to generate 0.61 times more return on investment than GE Vernova. However, Palomar Holdings is 1.65 times less risky than GE Vernova. It trades about 0.15 of its potential returns per unit of risk. GE Vernova LLC is currently generating about 0.01 per unit of risk. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Palomar Holdings  vs.  GE Vernova LLC

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.

GE Vernova LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GE Vernova LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, GE Vernova is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Palomar Holdings and GE Vernova

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

The idea behind Palomar Holdings and GE Vernova LLC 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.