Correlation Between Bowhead Specialty and Stifel Financial

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

Diversification Opportunities for Bowhead Specialty and Stifel Financial

0.08

Correlation Coefficient

Bowhead Specialty  Stifel Financial

Significant diversification

The 3 months correlation between Bowhead and Stifel is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and Stifel Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial Corp 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 Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial Corp has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and Stifel Financial go up and down completely randomly.

Pair Corralation between Bowhead Specialty and Stifel Financial

Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to under-perform the Stifel Financial. In addition to that, Bowhead Specialty is 2.17 times more volatile than Stifel Financial Corp. It trades about -0.13 of its total potential returns per unit of risk. Stifel Financial Corp is currently generating about 0.28 per unit of volatility. If you would invest  2,445  in Stifel Financial Corp on October 23, 2024 and sell it today you would earn a total of  100.00  from holding Stifel Financial Corp or generate 4.09% return on investment over 90 days.

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

Bowhead Specialty Holdings  vs.  Stifel Financial Corp

Bowhead Specialty

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bowhead Specialty Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Bowhead Specialty showed solid returns over the last few months and may actually be approaching a breakup point.

Stifel Financial Corp

Risk-Adjusted Performance

6 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stifel Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Stifel Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bowhead Specialty and Stifel Financial

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

The idea behind Bowhead Specialty Holdings and Stifel Financial Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.