Correlation Between Beauty Health and Bowhead Specialty
Can any of the company-specific risk be diversified away by investing in both Beauty Health 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 Beauty Health and Bowhead Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beauty Health Co and Bowhead Specialty Holdings, you can compare the effects of market volatilities on Beauty Health 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 Beauty Health with a short position of Bowhead Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beauty Health and Bowhead Specialty.
Diversification Opportunities for Beauty Health and Bowhead Specialty
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Beauty and Bowhead is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Beauty Health Co and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty and Beauty Health 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 Beauty Health Co 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 Beauty Health i.e., Beauty Health and Bowhead Specialty go up and down completely randomly.
Pair Corralation between Beauty Health and Bowhead Specialty
Given the investment horizon of 90 days Beauty Health Co is expected to under-perform the Bowhead Specialty. In addition to that, Beauty Health is 2.75 times more volatile than Bowhead Specialty Holdings. It trades about -0.03 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 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 |
Beauty Health Co vs. Bowhead Specialty Holdings
Performance |
| Timeline |
| Beauty Health |
| Bowhead Specialty |
Beauty Health and Bowhead Specialty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beauty Health and Bowhead Specialty
The main advantage of trading using opposite Beauty Health and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beauty Health 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.| Beauty Health vs. Clear Secure | Beauty Health vs. GXO Logistics | Beauty Health vs. Doximity | Beauty Health vs. Figs Inc |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |