Correlation Between Palomar Holdings and Old Dominion
Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and Old Dominion 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 Old Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and Old Dominion Freight, you can compare the effects of market volatilities on Palomar Holdings and Old Dominion 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 Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and Old Dominion.
Diversification Opportunities for Palomar Holdings and Old Dominion
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Palomar and Old is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Old Dominion Freight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Dominion Freight 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 Old Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Dominion Freight has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Old Dominion go up and down completely randomly.
Pair Corralation between Palomar Holdings and Old Dominion
Given the investment horizon of 90 days Palomar Holdings is expected to generate 1.19 times more return on investment than Old Dominion. However, Palomar Holdings is 1.19 times more volatile than Old Dominion Freight. It trades about 0.07 of its potential returns per unit of risk. Old Dominion Freight is currently generating about 0.02 per unit of risk. If you would invest 5,185 in Palomar Holdings on October 4, 2024 and sell it today you would earn a total of 5,160 from holding Palomar Holdings or generate 99.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Palomar Holdings vs. Old Dominion Freight
Performance |
Timeline |
Palomar Holdings |
Old Dominion Freight |
Palomar Holdings and Old Dominion Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Palomar Holdings and Old Dominion
The main advantage of trading using opposite Palomar Holdings and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, Old Dominion 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 Old Dominion will offset losses from the drop in Old Dominion's long position.Palomar Holdings vs. Horace Mann Educators | Palomar Holdings vs. Kemper | Palomar Holdings vs. RLI Corp | Palomar Holdings vs. Global Indemnity PLC |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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