Correlation Between Bowlin Travel and American Public

Can any of the company-specific risk be diversified away by investing in both Bowlin Travel and American Public 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 Bowlin Travel and American Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bowlin Travel Centers and American Public Education, you can compare the effects of market volatilities on Bowlin Travel and American Public 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 Bowlin Travel with a short position of American Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowlin Travel and American Public.

Diversification Opportunities for Bowlin Travel and American Public

-0.03

Correlation Coefficient

Bowlin Travel  American Public

Good diversification

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

Pair Corralation between Bowlin Travel and American Public

Given the investment horizon of 90 days Bowlin Travel Centers is expected to under-perform the American Public. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bowlin Travel Centers is 1.61 times less risky than American Public. The pink sheet trades about -0.02 of its potential returns per unit of risk. The American Public Education is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,626  in American Public Education on September 22, 2024 and sell it today you would earn a total of  473.00  from holding American Public Education or generate 29.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

Bowlin Travel Centers  vs.  American Public Education

Bowlin Travel Centers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bowlin Travel Centers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bowlin Travel is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

American Public Education

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Public Education are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical and fundamental indicators, American Public demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bowlin Travel and American Public

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

The idea behind Bowlin Travel Centers and American Public Education 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.