Correlation Between Bowman Consulting and CRA International

Can any of the company-specific risk be diversified away by investing in both Bowman Consulting and CRA International 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 Bowman Consulting and CRA International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bowman Consulting Group and CRA International, you can compare the effects of market volatilities on Bowman Consulting and CRA International 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 Bowman Consulting with a short position of CRA International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowman Consulting and CRA International.

Diversification Opportunities for Bowman Consulting and CRA International

-0.32

Correlation Coefficient

Bowman Consulting  CRA International

Very good diversification

The 3 months correlation between Bowman and CRA is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bowman Consulting Group and CRA International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRA International and Bowman Consulting 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 Bowman Consulting Group are associated (or correlated) with CRA International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRA International has no effect on the direction of Bowman Consulting i.e., Bowman Consulting and CRA International go up and down completely randomly.

Pair Corralation between Bowman Consulting and CRA International

Given the investment horizon of 90 days Bowman Consulting Group is expected to under-perform the CRA International. In addition to that, Bowman Consulting is 1.39 times more volatile than CRA International. It trades about -0.04 of its total potential returns per unit of risk. CRA International is currently generating about -0.02 per unit of volatility. If you would invest  18,494  in CRA International on December 28, 2024 and sell it today you would lose (883.00) from holding CRA International or give up 4.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bowman Consulting Group  vs.  CRA International

Bowman Consulting

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bowman Consulting Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

CRA International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CRA International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CRA International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bowman Consulting and CRA International

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

The idea behind Bowman Consulting Group and CRA International 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..