Correlation Between Bowlin Travel and Reitmans

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

Diversification Opportunities for Bowlin Travel and Reitmans

0.26

Correlation Coefficient

Bowlin Travel  Reitmans

Modest diversification

The 3 months correlation between Bowlin and Reitmans is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bowlin Travel Centers and Reitmans Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitmans Limited 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 Reitmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitmans Limited has no effect on the direction of Bowlin Travel i.e., Bowlin Travel and Reitmans go up and down completely randomly.

Pair Corralation between Bowlin Travel and Reitmans

Given the investment horizon of 90 days Bowlin Travel Centers is expected to generate 0.32 times more return on investment than Reitmans. However, Bowlin Travel Centers is 3.13 times less risky than Reitmans. It trades about -0.16 of its potential returns per unit of risk. Reitmans Limited is currently generating about -0.09 per unit of risk. If you would invest  400.00  in Bowlin Travel Centers on October 17, 2024 and sell it today you would lose (15.00) from holding Bowlin Travel Centers or give up 3.75% of portfolio value over 90 days.

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

Bowlin Travel Centers  vs.  Reitmans Limited

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 latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Reitmans Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reitmans Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Bowlin Travel and Reitmans

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

The idea behind Bowlin Travel Centers and Reitmans Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.