Correlation Between Palomar Holdings and Monument Circle

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

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

Diversification Opportunities for Palomar Holdings and Monument Circle

-0.44

Correlation Coefficient

Palomar Holdings  Monument Circle

Very good diversification

The 3 months correlation between Palomar and Monument is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Monument Circle Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Circle Acqu 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 Monument Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Circle Acqu has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Monument Circle go up and down completely randomly.

Pair Corralation between Palomar Holdings and Monument Circle

If you would invest (100.00) in Monument Circle Acquisition on September 25, 2024 and sell it today you would earn a total of  100.00  from holding Monument Circle Acquisition or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Palomar Holdings  vs.  Monument Circle Acquisition

Palomar Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Palomar Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Monument Circle Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monument Circle Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Monument Circle is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Palomar Holdings and Monument Circle

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

The idea behind Palomar Holdings and Monument Circle Acquisition 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.