Correlation Between Bowhead Specialty and Foremost Lithium
Can any of the company-specific risk be diversified away by investing in both Bowhead Specialty and Foremost Lithium 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 Foremost Lithium 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 Foremost Lithium Resource, you can compare the effects of market volatilities on Bowhead Specialty and Foremost Lithium 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 Foremost Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and Foremost Lithium.
Diversification Opportunities for Bowhead Specialty and Foremost Lithium
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bowhead and Foremost is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and Foremost Lithium Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foremost Lithium Resource 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 Foremost Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foremost Lithium Resource has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and Foremost Lithium go up and down completely randomly.
Pair Corralation between Bowhead Specialty and Foremost Lithium
Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to generate 0.17 times more return on investment than Foremost Lithium. However, Bowhead Specialty Holdings is 5.88 times less risky than Foremost Lithium. It trades about 0.11 of its potential returns per unit of risk. Foremost Lithium Resource is currently generating about 0.0 per unit of risk. If you would invest 2,938 in Bowhead Specialty Holdings on November 1, 2024 and sell it today you would earn a total of 347.00 from holding Bowhead Specialty Holdings or generate 11.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bowhead Specialty Holdings vs. Foremost Lithium Resource
Performance |
| Timeline |
| Bowhead Specialty |
| Foremost Lithium Resource |
Bowhead Specialty and Foremost Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowhead Specialty and Foremost Lithium
The main advantage of trading using opposite Bowhead Specialty and Foremost Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowhead Specialty position performs unexpectedly, Foremost Lithium 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 Foremost Lithium will offset losses from the drop in Foremost Lithium's long position.| Bowhead Specialty vs. Scandinavian Tobacco Group | Bowhead Specialty vs. Constellation Brands Class | Bowhead Specialty vs. Teleflex Incorporated | Bowhead Specialty vs. Philip Morris International |
| Foremost Lithium vs. United Guardian | Foremost Lithium vs. Aluminum of | Foremost Lithium vs. Allegion PLC | Foremost Lithium vs. Inflection Point Acquisition |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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