Correlation Between Bowhead Specialty and WR Berkley
Can any of the company-specific risk be diversified away by investing in both Bowhead Specialty and WR Berkley 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 WR Berkley 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 WR Berkley, you can compare the effects of market volatilities on Bowhead Specialty and WR Berkley 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 WR Berkley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and WR Berkley.
Diversification Opportunities for Bowhead Specialty and WR Berkley
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bowhead and WRB-PF is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and WR Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WR Berkley 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 WR Berkley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WR Berkley has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and WR Berkley go up and down completely randomly.
Pair Corralation between Bowhead Specialty and WR Berkley
Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to generate 2.23 times more return on investment than WR Berkley. However, Bowhead Specialty is 2.23 times more volatile than WR Berkley. It trades about -0.09 of its potential returns per unit of risk. WR Berkley is currently generating about -0.23 per unit of risk. If you would invest 3,232 in Bowhead Specialty Holdings on November 27, 2024 and sell it today you would lose (86.00) from holding Bowhead Specialty Holdings or give up 2.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bowhead Specialty Holdings vs. WR Berkley
Performance |
| Timeline |
| Bowhead Specialty |
| WR Berkley |
Bowhead Specialty and WR Berkley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bowhead Specialty and WR Berkley
The main advantage of trading using opposite Bowhead Specialty and WR Berkley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowhead Specialty position performs unexpectedly, WR Berkley 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 WR Berkley will offset losses from the drop in WR Berkley's long position.| Bowhead Specialty vs. RBC Bearings Incorporated | Bowhead Specialty vs. Procter Gamble | Bowhead Specialty vs. Fernhill Beverage | Bowhead Specialty vs. Kellanova |
| WR Berkley vs. W R Berkley | WR Berkley vs. Southern Co | WR Berkley vs. Aegon Funding | WR Berkley vs. American Financial Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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