Correlation Between American International and Bowhead Specialty
Can any of the company-specific risk be diversified away by investing in both American International and Bowhead Specialty 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 American International and Bowhead Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American International Group and Bowhead Specialty Holdings, you can compare the effects of market volatilities on American International and Bowhead Specialty 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 American International with a short position of Bowhead Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of American International and Bowhead Specialty.
Diversification Opportunities for American International and Bowhead Specialty
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Bowhead is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding American International Group and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty and American International 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 American International Group are associated (or correlated) with Bowhead Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowhead Specialty has no effect on the direction of American International i.e., American International and Bowhead Specialty go up and down completely randomly.
Pair Corralation between American International and Bowhead Specialty
Considering the 90-day investment horizon American International Group is expected to generate 0.71 times more return on investment than Bowhead Specialty. However, American International Group is 1.41 times less risky than Bowhead Specialty. It trades about 0.1 of its potential returns per unit of risk. Bowhead Specialty Holdings is currently generating about 0.07 per unit of risk. If you would invest 7,611 in American International Group on November 28, 2024 and sell it today you would earn a total of 206.00 from holding American International Group or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American International Group vs. Bowhead Specialty Holdings
Performance |
| Timeline |
| American International |
| Bowhead Specialty |
American International and Bowhead Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American International and Bowhead Specialty
The main advantage of trading using opposite American International and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American International position performs unexpectedly, Bowhead Specialty 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 Bowhead Specialty will offset losses from the drop in Bowhead Specialty's long position.| American International vs. Axa Equitable Holdings | American International vs. Arch Capital Group | American International vs. Old Republic International | American International vs. Sun Life Financial |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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