Correlation Between Bowhead Specialty and CNA Financial
Can any of the company-specific risk be diversified away by investing in both Bowhead Specialty and CNA Financial 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 CNA Financial 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 CNA Financial, you can compare the effects of market volatilities on Bowhead Specialty and CNA Financial 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 CNA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and CNA Financial.
Diversification Opportunities for Bowhead Specialty and CNA Financial
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bowhead and CNA is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and CNA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNA Financial 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 CNA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNA Financial has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and CNA Financial go up and down completely randomly.
Pair Corralation between Bowhead Specialty and CNA Financial
Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to generate 1.89 times more return on investment than CNA Financial. However, Bowhead Specialty is 1.89 times more volatile than CNA Financial. It trades about 0.16 of its potential returns per unit of risk. CNA Financial is currently generating about 0.08 per unit of risk. If you would invest 2,380 in Bowhead Specialty Holdings on September 2, 2024 and sell it today you would earn a total of 1,304 from holding Bowhead Specialty Holdings or generate 54.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 53.63% |
| Values | Daily Returns |
Bowhead Specialty Holdings vs. CNA Financial
Performance |
| Timeline |
| Bowhead Specialty |
| CNA Financial |
Bowhead Specialty and CNA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowhead Specialty and CNA Financial
The main advantage of trading using opposite Bowhead Specialty and CNA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowhead Specialty position performs unexpectedly, CNA Financial 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 CNA Financial will offset losses from the drop in CNA Financial's long position.| Bowhead Specialty vs. CenterPoint Energy | Bowhead Specialty vs. Cheniere Energy Partners | Bowhead Specialty vs. Spyre Therapeutics | Bowhead Specialty vs. WEC Energy Group |
| CNA Financial vs. Selective Insurance Group | CNA Financial vs. Kemper | CNA Financial vs. Donegal Group B | CNA Financial vs. Argo Group International |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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