Correlation Between Palomar Holdings and Blue Owl

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

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

Diversification Opportunities for Palomar Holdings and Blue Owl

0.14

Correlation Coefficient

Palomar Holdings  Blue Owl

Average diversification

The 3 months correlation between Palomar and Blue is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Blue Owl Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Owl Capital 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 Blue Owl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Owl Capital has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Blue Owl go up and down completely randomly.

Pair Corralation between Palomar Holdings and Blue Owl

Given the investment horizon of 90 days Palomar Holdings is expected to generate 2.45 times more return on investment than Blue Owl. However, Palomar Holdings is 2.45 times more volatile than Blue Owl Capital. It trades about 0.17 of its potential returns per unit of risk. Blue Owl Capital is currently generating about 0.02 per unit of risk. If you would invest  10,439  in Palomar Holdings on December 27, 2024 and sell it today you would earn a total of  3,221  from holding Palomar Holdings or generate 30.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Palomar Holdings  vs.  Blue Owl Capital

Palomar Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 13 (%) 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.

Blue Owl Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Owl Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Blue Owl 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 Blue Owl

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

The idea behind Palomar Holdings and Blue Owl Capital 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.