Correlation Between Celsius Holdings and Bowhead Specialty

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

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

Diversification Opportunities for Celsius Holdings and Bowhead Specialty

0.45

Correlation Coefficient

Celsius Holdings  Bowhead Specialty

Very weak diversification

The 3 months correlation between Celsius and Bowhead is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty and Celsius Holdings 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 Celsius Holdings 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 Celsius Holdings i.e., Celsius Holdings and Bowhead Specialty go up and down completely randomly.

Pair Corralation between Celsius Holdings and Bowhead Specialty

Given the investment horizon of 90 days Celsius Holdings is expected to under-perform the Bowhead Specialty. In addition to that, Celsius Holdings is 1.86 times more volatile than Bowhead Specialty Holdings. It trades about -0.04 of its total potential returns per unit of risk. Bowhead Specialty Holdings is currently generating about 0.09 per unit of volatility. If you would invest  2,380  in Bowhead Specialty Holdings on December 2, 2024 and sell it today you would earn a total of  983.00  from holding Bowhead Specialty Holdings or generate 41.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	52.16%
Values	Daily Returns

Celsius Holdings  vs.  Bowhead Specialty Holdings

Celsius Holdings

Risk-Adjusted Performance

Very Weak

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

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 latest unsteady performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Celsius Holdings and Bowhead Specialty

The main advantage of trading using opposite Celsius Holdings and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celsius Holdings 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 Celsius Holdings 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.