Correlation Between Bowhead Specialty and HCI
Can any of the company-specific risk be diversified away by investing in both Bowhead Specialty and HCI 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 HCI 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 HCI Group, you can compare the effects of market volatilities on Bowhead Specialty and HCI 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 HCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and HCI.
Diversification Opportunities for Bowhead Specialty and HCI
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bowhead and HCI is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and HCI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCI Group 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 HCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCI Group has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and HCI go up and down completely randomly.
Pair Corralation between Bowhead Specialty and HCI
Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to generate 0.81 times more return on investment than HCI. However, Bowhead Specialty Holdings is 1.23 times less risky than HCI. It trades about 0.16 of its potential returns per unit of risk. HCI Group is currently generating about 0.11 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 | 26.81% |
| Values | Daily Returns |
Bowhead Specialty Holdings vs. HCI Group
Performance |
| Timeline |
| Bowhead Specialty |
| HCI Group |
Bowhead Specialty and HCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowhead Specialty and HCI
The main advantage of trading using opposite Bowhead Specialty and HCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowhead Specialty position performs unexpectedly, HCI 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 HCI will offset losses from the drop in HCI'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 |
| HCI vs. Universal Insurance Holdings | HCI vs. Kingstone Companies | HCI vs. Horace Mann Educators | HCI vs. Heritage Insurance Hldgs |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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