Correlation Between Palomar Holdings and Wallbox NV

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

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

Diversification Opportunities for Palomar Holdings and Wallbox NV

-0.16

Correlation Coefficient

Palomar Holdings  Wallbox NV

Good diversification

The 3 months correlation between Palomar and Wallbox is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Wallbox NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wallbox NV 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 Wallbox NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wallbox NV has no effect on the direction of Palomar Holdings i.e., Palomar Holdings and Wallbox NV go up and down completely randomly.

Pair Corralation between Palomar Holdings and Wallbox NV

Given the investment horizon of 90 days Palomar Holdings is expected to generate 0.4 times more return on investment than Wallbox NV. However, Palomar Holdings is 2.53 times less risky than Wallbox NV. It trades about 0.1 of its potential returns per unit of risk. Wallbox NV is currently generating about -0.08 per unit of risk. If you would invest  7,842  in Palomar Holdings on February 6, 2024 and sell it today you would earn a total of  240.00  from holding Palomar Holdings or generate 3.06% return on investment over 90 days.

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

Palomar Holdings  vs.  Wallbox NV

Palomar Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 14 (%) 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.

Wallbox NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wallbox NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental drivers, Wallbox NV is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Palomar Holdings and Wallbox NV

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

The idea behind Palomar Holdings and Wallbox NV 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 Anywhere module to track or share privately all of your investments from the convenience of any device.