Correlation Between Life Insurance and Bowhead Specialty
Can any of the company-specific risk be diversified away by investing in both Life Insurance and Bowhead Specialty 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 Life Insurance and Bowhead Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Insurance and Bowhead Specialty Holdings, you can compare the effects of market volatilities on Life Insurance and Bowhead Specialty 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 Life Insurance with a short position of Bowhead Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Insurance and Bowhead Specialty.
Diversification Opportunities for Life Insurance and Bowhead Specialty
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Life and Bowhead is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty and Life Insurance 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 Life Insurance are associated (or correlated) with Bowhead Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowhead Specialty has no effect on the direction of Life Insurance i.e., Life Insurance and Bowhead Specialty go up and down completely randomly.
Pair Corralation between Life Insurance and Bowhead Specialty
Assuming the 90 days horizon Life Insurance is expected to under-perform the Bowhead Specialty. In addition to that, Life Insurance is 1.08 times more volatile than Bowhead Specialty Holdings. It trades about -0.07 of its total potential returns per unit of risk. Bowhead Specialty Holdings is currently generating about 0.09 per unit of volatility. If you would invest 2,380 in Bowhead Specialty Holdings on October 26, 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 Together |
| Strength | Significant |
| Accuracy | 53.16% |
| Values | Daily Returns |
Life Insurance vs. Bowhead Specialty Holdings
Performance |
| Timeline |
| Life Insurance |
| Bowhead Specialty |
Life Insurance and Bowhead Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Insurance and Bowhead Specialty
The main advantage of trading using opposite Life Insurance and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Insurance position performs unexpectedly, Bowhead Specialty 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 Bowhead Specialty will offset losses from the drop in Bowhead Specialty's long position.| Life Insurance vs. Brandywine Realty Trust | Life Insurance vs. Naked Wines plc | Life Insurance vs. SNDL Inc | Life Insurance vs. Oasis Hotel Resort |
| Bowhead Specialty vs. EastGroup Properties | Bowhead Specialty vs. East Africa Metals | Bowhead Specialty vs. Deluxe | Bowhead Specialty vs. Udemy 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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