Correlation Between CMG Holdings and Bowlin Travel
Can any of the company-specific risk be diversified away by investing in both CMG Holdings and Bowlin Travel 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 CMG Holdings and Bowlin Travel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMG Holdings Group and Bowlin Travel Centers, you can compare the effects of market volatilities on CMG Holdings and Bowlin Travel 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 CMG Holdings with a short position of Bowlin Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMG Holdings and Bowlin Travel.
Diversification Opportunities for CMG Holdings and Bowlin Travel
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CMG and Bowlin is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CMG Holdings Group and Bowlin Travel Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowlin Travel Centers and CMG Holdings 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 CMG Holdings Group are associated (or correlated) with Bowlin Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowlin Travel Centers has no effect on the direction of CMG Holdings i.e., CMG Holdings and Bowlin Travel go up and down completely randomly.
Pair Corralation between CMG Holdings and Bowlin Travel
Given the investment horizon of 90 days CMG Holdings Group is expected to generate 7.6 times more return on investment than Bowlin Travel. However, CMG Holdings is 7.6 times more volatile than Bowlin Travel Centers. It trades about 0.06 of its potential returns per unit of risk. Bowlin Travel Centers is currently generating about -0.01 per unit of risk. If you would invest 0.18 in CMG Holdings Group on December 14, 2024 and sell it today you would lose (0.06) from holding CMG Holdings Group or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.56% |
| Values | Daily Returns |
CMG Holdings Group vs. Bowlin Travel Centers
Performance |
| Timeline |
| CMG Holdings Group |
| Bowlin Travel Centers |
CMG Holdings and Bowlin Travel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMG Holdings and Bowlin Travel
The main advantage of trading using opposite CMG Holdings and Bowlin Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMG Holdings position performs unexpectedly, Bowlin Travel 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 Bowlin Travel will offset losses from the drop in Bowlin Travel's long position.| CMG Holdings vs. Tautachrome | ||
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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