Correlation Between Willscot Mobile and Palomar Holdings

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

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

Diversification Opportunities for Willscot Mobile and Palomar Holdings

-0.59

Correlation Coefficient

Willscot Mobile  Palomar Holdings

Excellent diversification

The 3 months correlation between Willscot and Palomar is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Willscot Mobile Mini and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and Willscot Mobile 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 Willscot Mobile Mini 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 Willscot Mobile i.e., Willscot Mobile and Palomar Holdings go up and down completely randomly.

Pair Corralation between Willscot Mobile and Palomar Holdings

Considering the 90-day investment horizon Willscot Mobile Mini is expected to under-perform the Palomar Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Willscot Mobile Mini is 1.03 times less risky than Palomar Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The Palomar Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  10,518  in Palomar Holdings on December 26, 2024 and sell it today you would earn a total of  2,984  from holding Palomar Holdings or generate 28.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Willscot Mobile Mini  vs.  Palomar Holdings

Willscot Mobile Mini

Risk-Adjusted Performance

Very Weak

Over the last 90 days Willscot Mobile Mini has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Palomar Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 12 (%) 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 Willscot Mobile and Palomar Holdings

The main advantage of trading using opposite Willscot Mobile and Palomar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Willscot Mobile 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 Willscot Mobile Mini 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.