Correlation Between Bowhead Specialty and Loews Corp
Can any of the company-specific risk be diversified away by investing in both Bowhead Specialty and Loews Corp 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 Loews Corp 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 Loews Corp, you can compare the effects of market volatilities on Bowhead Specialty and Loews Corp 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 Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and Loews Corp.
Diversification Opportunities for Bowhead Specialty and Loews Corp
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bowhead and Loews is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp 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 Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and Loews Corp go up and down completely randomly.
Pair Corralation between Bowhead Specialty and Loews Corp
Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to generate 1.28 times more return on investment than Loews Corp. However, Bowhead Specialty is 1.28 times more volatile than Loews Corp. It trades about 0.57 of its potential returns per unit of risk. Loews Corp is currently generating about 0.43 per unit of risk. If you would invest 2,968 in Bowhead Specialty Holdings on September 3, 2024 and sell it today you would earn a total of 673.00 from holding Bowhead Specialty Holdings or generate 22.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bowhead Specialty Holdings vs. Loews Corp
Performance |
| Timeline |
| Bowhead Specialty |
| Loews Corp |
Bowhead Specialty and Loews Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowhead Specialty and Loews Corp
The main advantage of trading using opposite Bowhead Specialty and Loews Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowhead Specialty position performs unexpectedly, Loews Corp 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 Loews Corp will offset losses from the drop in Loews Corp's long position.| Bowhead Specialty vs. High Performance Beverages | Bowhead Specialty vs. Diageo PLC ADR | Bowhead Specialty vs. Viemed Healthcare | Bowhead Specialty vs. Ambev SA ADR |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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