Correlation Between Bowhead Specialty and Aterian
Can any of the company-specific risk be diversified away by investing in both Bowhead Specialty and Aterian 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 Bowhead Specialty and Aterian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bowhead Specialty Holdings and Aterian, you can compare the effects of market volatilities on Bowhead Specialty and Aterian 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 Bowhead Specialty with a short position of Aterian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and Aterian.
Diversification Opportunities for Bowhead Specialty and Aterian
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bowhead and Aterian is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and Bowhead Specialty 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 Bowhead Specialty Holdings are associated (or correlated) with Aterian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aterian has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and Aterian go up and down completely randomly.
Pair Corralation between Bowhead Specialty and Aterian
Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to generate 0.78 times more return on investment than Aterian. However, Bowhead Specialty Holdings is 1.28 times less risky than Aterian. It trades about -0.16 of its potential returns per unit of risk. Aterian is currently generating about -0.23 per unit of risk. If you would invest 3,434 in Bowhead Specialty Holdings on November 3, 2024 and sell it today you would lose (201.00) from holding Bowhead Specialty Holdings or give up 5.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bowhead Specialty Holdings vs. Aterian
Performance |
| Timeline |
| Bowhead Specialty |
| Aterian |
Bowhead Specialty and Aterian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowhead Specialty and Aterian
The main advantage of trading using opposite Bowhead Specialty and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowhead Specialty position performs unexpectedly, Aterian 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 Aterian will offset losses from the drop in Aterian's long position.| Bowhead Specialty vs. Kingdee International Software | Bowhead Specialty vs. DHI Group | Bowhead Specialty vs. Uber Technologies | Bowhead Specialty vs. Life360, Common Stock |
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.
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