Correlation Between Bowhead Specialty and Killbuck Bancshares

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

Diversification Opportunities for Bowhead Specialty and Killbuck Bancshares

0.29

Correlation Coefficient

Bowhead Specialty  Killbuck Bancshares

Modest diversification

The 3 months correlation between Bowhead and Killbuck is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and Killbuck Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Killbuck Bancshares 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 Killbuck Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Killbuck Bancshares has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and Killbuck Bancshares go up and down completely randomly.

Pair Corralation between Bowhead Specialty and Killbuck Bancshares

Considering the 90-day investment horizon Bowhead Specialty is expected to generate 6.01 times less return on investment than Killbuck Bancshares. But when comparing it to its historical volatility, Bowhead Specialty Holdings is 3.86 times less risky than Killbuck Bancshares. It trades about 0.08 of its potential returns per unit of risk. Killbuck Bancshares is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,800  in Killbuck Bancshares on December 20, 2024 and sell it today you would earn a total of  5,074  from holding Killbuck Bancshares or generate 46.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Bowhead Specialty Holdings  vs.  Killbuck Bancshares

Bowhead Specialty

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bowhead Specialty Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Bowhead Specialty may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Killbuck Bancshares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Killbuck Bancshares are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, Killbuck Bancshares sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bowhead Specialty and Killbuck Bancshares

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

The idea behind Bowhead Specialty Holdings and Killbuck Bancshares 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.