Correlation Between Bowhead Specialty and Hub Cyber

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

Diversification Opportunities for Bowhead Specialty and Hub Cyber

-0.03

Correlation Coefficient

Bowhead Specialty  Hub Cyber

Good diversification

The 3 months correlation between Bowhead and Hub is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and Hub Cyber Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub Cyber Security 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 Hub Cyber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub Cyber Security has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and Hub Cyber go up and down completely randomly.

Pair Corralation between Bowhead Specialty and Hub Cyber

Considering the 90-day investment horizon Bowhead Specialty is expected to generate 6.35 times less return on investment than Hub Cyber. But when comparing it to its historical volatility, Bowhead Specialty Holdings is 9.82 times less risky than Hub Cyber. It trades about 0.1 of its potential returns per unit of risk. Hub Cyber Security is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Hub Cyber Security on October 23, 2024 and sell it today you would lose (23.01) from holding Hub Cyber Security or give up 82.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	35.7%
Values	Daily Returns

Bowhead Specialty Holdings  vs.  Hub Cyber Security

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 weak basic indicators, Bowhead Specialty showed solid returns over the last few months and may actually be approaching a breakup point.

Hub Cyber Security

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hub Cyber Security are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Hub Cyber showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bowhead Specialty and Hub Cyber

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

The idea behind Bowhead Specialty Holdings and Hub Cyber Security 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.