Correlation Between Boomer Holdings and Bowlin Travel

Can any of the company-specific risk be diversified away by investing in both Boomer 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 Boomer 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 Boomer Holdings and Bowlin Travel Centers, you can compare the effects of market volatilities on Boomer 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 Boomer Holdings with a short position of Bowlin Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boomer Holdings and Bowlin Travel.

Diversification Opportunities for Boomer Holdings and Bowlin Travel

0.0

Correlation Coefficient

Boomer Holdings  Bowlin Travel

Pay attention - limited upside

The 3 months correlation between Boomer and Bowlin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Boomer Holdings 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 Boomer 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 Boomer Holdings 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 Boomer Holdings i.e., Boomer Holdings and Bowlin Travel go up and down completely randomly.

Pair Corralation between Boomer Holdings and Bowlin Travel

If you would invest (100.00) in Boomer Holdings on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Boomer Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Boomer Holdings  vs.  Bowlin Travel Centers

Boomer Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boomer Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Boomer Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Bowlin Travel Centers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bowlin Travel Centers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bowlin Travel is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Boomer Holdings and Bowlin Travel

The main advantage of trading using opposite Boomer Holdings and Bowlin Travel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boomer 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.

The idea behind Boomer Holdings and Bowlin Travel Centers pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.