Correlation Between Bowhead Specialty and Beauty Health
Can any of the company-specific risk be diversified away by investing in both Bowhead Specialty and Beauty Health 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 Beauty Health 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 Beauty Health Co, you can compare the effects of market volatilities on Bowhead Specialty and Beauty Health 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 Beauty Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and Beauty Health.
Diversification Opportunities for Bowhead Specialty and Beauty Health
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bowhead and Beauty is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and Beauty Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Health 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 Beauty Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Health has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and Beauty Health go up and down completely randomly.
Pair Corralation between Bowhead Specialty and Beauty Health
Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to generate 0.36 times more return on investment than Beauty Health. However, Bowhead Specialty Holdings is 2.75 times less risky than Beauty Health. It trades about 0.09 of its potential returns per unit of risk. Beauty Health Co is currently generating about -0.03 per unit of risk. If you would invest 2,380 in Bowhead Specialty Holdings on October 27, 2024 and sell it today you would earn a total of 798.00 from holding Bowhead Specialty Holdings or generate 33.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 34.01% |
| Values | Daily Returns |
Bowhead Specialty Holdings vs. Beauty Health Co
Performance |
| Timeline |
| Bowhead Specialty |
| Beauty Health |
Bowhead Specialty and Beauty Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowhead Specialty and Beauty Health
The main advantage of trading using opposite Bowhead Specialty and Beauty Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowhead Specialty position performs unexpectedly, Beauty Health 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 Beauty Health will offset losses from the drop in Beauty Health's long position.| Bowhead Specialty vs. EastGroup Properties | Bowhead Specialty vs. East Africa Metals | Bowhead Specialty vs. Deluxe | Bowhead Specialty vs. Udemy Inc |
| Beauty Health vs. Clear Secure | Beauty Health vs. GXO Logistics | Beauty Health vs. Doximity | Beauty Health vs. Figs Inc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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