Correlation Between Palomar Holdings and INGERSOLL

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Can any of the company-specific risk be diversified away by investing in both Palomar Holdings and INGERSOLL 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 INGERSOLL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palomar Holdings and INGERSOLL RAND GLOBAL HLDG, you can compare the effects of market volatilities on Palomar Holdings and INGERSOLL 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 INGERSOLL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palomar Holdings and INGERSOLL.

Diversification Opportunities for Palomar Holdings and INGERSOLL

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Palomar and INGERSOLL is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and INGERSOLL RAND GLOBAL HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGERSOLL RAND GLOBAL 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 INGERSOLL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGERSOLL RAND GLOBAL has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and INGERSOLL go up and down completely randomly.

Pair Corralation between Palomar Holdings and INGERSOLL

Given the investment horizon of 90 days Palomar Holdings is expected to generate 2.08 times more return on investment than INGERSOLL. However, Palomar Holdings is 2.08 times more volatile than INGERSOLL RAND GLOBAL HLDG. It trades about 0.05 of its potential returns per unit of risk. INGERSOLL RAND GLOBAL HLDG is currently generating about -0.14 per unit of risk. If you would invest  9,748  in Palomar Holdings on September 25, 2024 and sell it today you would earn a total of  509.00  from holding Palomar Holdings or generate 5.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy46.03%
ValuesDaily Returns

Palomar Holdings  vs.  INGERSOLL RAND GLOBAL HLDG

 Performance 
       Timeline  
Palomar Holdings 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 3 (%) 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.
INGERSOLL RAND GLOBAL 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days INGERSOLL RAND GLOBAL HLDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INGERSOLL RAND GLOBAL HLDG investors.

Palomar Holdings and INGERSOLL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Palomar Holdings and INGERSOLL

The main advantage of trading using opposite Palomar Holdings and INGERSOLL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar Holdings position performs unexpectedly, INGERSOLL 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 INGERSOLL will offset losses from the drop in INGERSOLL's long position.
The idea behind Palomar Holdings and INGERSOLL RAND GLOBAL HLDG 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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