Correlation Between Bowhead Specialty and MSP Recovery
Can any of the company-specific risk be diversified away by investing in both Bowhead Specialty and MSP Recovery 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 MSP Recovery 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 MSP Recovery, you can compare the effects of market volatilities on Bowhead Specialty and MSP Recovery 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 MSP Recovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and MSP Recovery.
Diversification Opportunities for Bowhead Specialty and MSP Recovery
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bowhead and MSP is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and MSP Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSP Recovery 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 MSP Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSP Recovery has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and MSP Recovery go up and down completely randomly.
Pair Corralation between Bowhead Specialty and MSP Recovery
Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to generate 0.47 times more return on investment than MSP Recovery. However, Bowhead Specialty Holdings is 2.14 times less risky than MSP Recovery. It trades about -0.13 of its potential returns per unit of risk. MSP Recovery is currently generating about -0.33 per unit of risk. If you would invest 3,385 in Bowhead Specialty Holdings on November 4, 2024 and sell it today you would lose (152.00) from holding Bowhead Specialty Holdings or give up 4.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bowhead Specialty Holdings vs. MSP Recovery
Performance |
| Timeline |
| Bowhead Specialty |
| MSP Recovery |
Bowhead Specialty and MSP Recovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowhead Specialty and MSP Recovery
The main advantage of trading using opposite Bowhead Specialty and MSP Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowhead Specialty position performs unexpectedly, MSP Recovery 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 MSP Recovery will offset losses from the drop in MSP Recovery's long position.| Bowhead Specialty vs. Playtech plc | Bowhead Specialty vs. Mattel Inc | Bowhead Specialty vs. Northstar Clean Technologies | Bowhead Specialty vs. CleanGo Innovations |
| MSP Recovery vs. Willamette Valley Vineyards | MSP Recovery vs. Allied Gaming Entertainment | MSP Recovery vs. Roblox Corp | MSP Recovery vs. ScanSource |
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 Stocks Directory module to find actively traded stocks across global markets.
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