Correlation Between KROGER and Palomar Holdings

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

By analyzing existing cross correlation between KROGER 515 percent and Palomar Holdings, you can compare the effects of market volatilities on KROGER and Palomar Holdings 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 KROGER with a short position of Palomar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of KROGER and Palomar Holdings.

Diversification Opportunities for KROGER and Palomar Holdings

-0.43

Correlation Coefficient

KROGER  Palomar Holdings

Very good diversification

The 3 months correlation between KROGER and Palomar is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding KROGER 515 percent and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and KROGER 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 KROGER 515 percent are associated (or correlated) with Palomar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palomar Holdings has no effect on the direction of KROGER i.e., KROGER and Palomar Holdings go up and down completely randomly.

Pair Corralation between KROGER and Palomar Holdings

Assuming the 90 days trading horizon KROGER 515 percent is expected to under-perform the Palomar Holdings. But the bond apears to be less risky and, when comparing its historical volatility, KROGER 515 percent is 1.51 times less risky than Palomar Holdings. The bond trades about -0.21 of its potential returns per unit of risk. The Palomar Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  9,578  in Palomar Holdings on September 14, 2024 and sell it today you would earn a total of  1,379  from holding Palomar Holdings or generate 14.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	87.3%
Values	Daily Returns

KROGER 515 percent  vs.  Palomar Holdings

KROGER 515 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KROGER 515 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for KROGER 515 percent investors.

Palomar Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 8 (%) 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.

Pair Trading with KROGER and Palomar Holdings

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

The idea behind KROGER 515 percent and Palomar 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.