Correlation Between Bowhead Specialty and Contango ORE

Can any of the company-specific risk be diversified away by investing in both Bowhead Specialty and Contango ORE 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 Contango ORE 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 Contango ORE, you can compare the effects of market volatilities on Bowhead Specialty and Contango ORE 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 Contango ORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowhead Specialty and Contango ORE.

Diversification Opportunities for Bowhead Specialty and Contango ORE

-0.6

Correlation Coefficient

Bowhead Specialty  Contango ORE

Excellent diversification

The 3 months correlation between Bowhead and Contango is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and Contango ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contango ORE 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 Contango ORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contango ORE has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and Contango ORE go up and down completely randomly.

Pair Corralation between Bowhead Specialty and Contango ORE

Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to under-perform the Contango ORE. But the stock apears to be less risky and, when comparing its historical volatility, Bowhead Specialty Holdings is 1.92 times less risky than Contango ORE. The stock trades about -0.13 of its potential returns per unit of risk. The Contango ORE is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,030  in Contango ORE on October 24, 2024 and sell it today you would earn a total of  85.00  from holding Contango ORE or generate 8.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Bowhead Specialty Holdings  vs.  Contango ORE

Bowhead Specialty

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bowhead Specialty Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Bowhead Specialty may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Contango ORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Contango ORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bowhead Specialty and Contango ORE

The main advantage of trading using opposite Bowhead Specialty and Contango ORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowhead Specialty position performs unexpectedly, Contango ORE 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 Contango ORE will offset losses from the drop in Contango ORE's long position.

The idea behind Bowhead Specialty Holdings and Contango ORE 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 CEOs Directory module to screen CEOs from public companies around the world.