Correlation Between Palomar Holdings and Lindblad Expeditions

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

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

Diversification Opportunities for Palomar Holdings and Lindblad Expeditions

0.75

Correlation Coefficient

Palomar Holdings  Lindblad Expeditions

Poor diversification

The 3 months correlation between Palomar and Lindblad is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Lindblad Expeditions Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindblad Expeditions 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 Lindblad Expeditions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindblad Expeditions has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Lindblad Expeditions go up and down completely randomly.

Pair Corralation between Palomar Holdings and Lindblad Expeditions

Given the investment horizon of 90 days Palomar Holdings is expected to generate 0.64 times more return on investment than Lindblad Expeditions. However, Palomar Holdings is 1.57 times less risky than Lindblad Expeditions. It trades about -0.09 of its potential returns per unit of risk. Lindblad Expeditions Holdings is currently generating about -0.15 per unit of risk. 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

Palomar Holdings  vs.  Lindblad Expeditions Holdings

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.

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.

Pair Trading with Palomar Holdings and Lindblad Expeditions

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

The idea behind Palomar Holdings and Lindblad Expeditions 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.