Correlation Between Beyond Meat and Bowhead Specialty

Can any of the company-specific risk be diversified away by investing in both Beyond Meat and Bowhead Specialty 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 Beyond Meat and Bowhead Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beyond Meat and Bowhead Specialty Holdings, you can compare the effects of market volatilities on Beyond Meat and Bowhead Specialty 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 Beyond Meat with a short position of Bowhead Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beyond Meat and Bowhead Specialty.

Diversification Opportunities for Beyond Meat and Bowhead Specialty

-0.82

Correlation Coefficient

Beyond Meat  Bowhead Specialty

Pay attention - limited upside

The 3 months correlation between Beyond and Bowhead is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Meat and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty and Beyond Meat 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 Beyond Meat are associated (or correlated) with Bowhead Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowhead Specialty has no effect on the direction of Beyond Meat i.e., Beyond Meat and Bowhead Specialty go up and down completely randomly.

Pair Corralation between Beyond Meat and Bowhead Specialty

Given the investment horizon of 90 days Beyond Meat is expected to under-perform the Bowhead Specialty. In addition to that, Beyond Meat is 2.22 times more volatile than Bowhead Specialty Holdings. It trades about -0.19 of its total potential returns per unit of risk. Bowhead Specialty Holdings is currently generating about -0.26 per unit of volatility. If you would invest  3,573  in Bowhead Specialty Holdings on October 9, 2024 and sell it today you would lose (353.00) from holding Bowhead Specialty Holdings or give up 9.88% of portfolio value over 90 days.

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

Beyond Meat  vs.  Bowhead Specialty Holdings

Beyond Meat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Meat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bowhead Specialty

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bowhead Specialty Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Bowhead Specialty showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beyond Meat and Bowhead Specialty

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

The idea behind Beyond Meat and Bowhead Specialty Holdings 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.