Correlation Between XMReality and Palomar Holdings

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

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

Diversification Opportunities for XMReality and Palomar Holdings

0.0

Correlation Coefficient

XMReality  Palomar Holdings

Pay attention - limited upside

The 3 months correlation between XMReality and Palomar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding XMReality AB and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and XMReality 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 XMReality AB 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 XMReality i.e., XMReality and Palomar Holdings go up and down completely randomly.

Pair Corralation between XMReality and Palomar Holdings

If you would invest  10,439  in Palomar Holdings on December 27, 2024 and sell it today you would earn a total of  3,075  from holding Palomar Holdings or generate 29.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

XMReality AB  vs.  Palomar Holdings

XMReality AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days XMReality AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, XMReality is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with XMReality and Palomar Holdings

The main advantage of trading using opposite XMReality and Palomar Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XMReality 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 XMReality AB 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.