Correlation Between Bowhead Specialty and W R

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

Diversification Opportunities for Bowhead Specialty and W R

0.39

Correlation Coefficient

Bowhead Specialty  W R

Weak diversification

The 3 months correlation between Bowhead and WRB is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bowhead Specialty Holdings and W R Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W R Berkley 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 W R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W R Berkley has no effect on the direction of Bowhead Specialty i.e., Bowhead Specialty and W R go up and down completely randomly.

Pair Corralation between Bowhead Specialty and W R

Considering the 90-day investment horizon Bowhead Specialty Holdings is expected to under-perform the W R. In addition to that, Bowhead Specialty is 1.42 times more volatile than W R Berkley. It trades about -0.15 of its total potential returns per unit of risk. W R Berkley is currently generating about -0.02 per unit of volatility. If you would invest  6,393  in W R Berkley on November 28, 2024 and sell it today you would lose (111.00) from holding W R Berkley or give up 1.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bowhead Specialty Holdings  vs.  W R Berkley

Bowhead Specialty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bowhead Specialty Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

W R Berkley

Risk-Adjusted Performance

Very Weak

Over the last 90 days W R Berkley has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, W R is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bowhead Specialty and W R

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

The idea behind Bowhead Specialty Holdings and W R Berkley 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.