Correlation Between CNA Financial and Bowhead Specialty
Can any of the company-specific risk be diversified away by investing in both CNA Financial 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 CNA Financial and Bowhead Specialty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNA Financial and Bowhead Specialty Holdings, you can compare the effects of market volatilities on CNA Financial 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 CNA Financial with a short position of Bowhead Specialty. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNA Financial and Bowhead Specialty.
Diversification Opportunities for CNA Financial and Bowhead Specialty
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CNA and Bowhead is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CNA Financial and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty and CNA Financial 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 CNA Financial 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 CNA Financial i.e., CNA Financial and Bowhead Specialty go up and down completely randomly.
Pair Corralation between CNA Financial and Bowhead Specialty
Considering the 90-day investment horizon CNA Financial is expected to generate 0.67 times more return on investment than Bowhead Specialty. However, CNA Financial is 1.5 times less risky than Bowhead Specialty. It trades about 0.0 of its potential returns per unit of risk. Bowhead Specialty Holdings is currently generating about -0.06 per unit of risk. If you would invest 4,935 in CNA Financial on December 1, 2024 and sell it today you would lose (38.00) from holding CNA Financial or give up 0.77% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CNA Financial vs. Bowhead Specialty Holdings
Performance |
Timeline |
CNA Financial |
Bowhead Specialty |
CNA Financial and Bowhead Specialty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CNA Financial and Bowhead Specialty
The main advantage of trading using opposite CNA Financial and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNA Financial 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.CNA Financial vs. Selective Insurance Group | CNA Financial vs. Kemper | CNA Financial vs. Donegal Group B | CNA Financial vs. Argo Group International |
Bowhead Specialty vs. Hurco Companies | Bowhead Specialty vs. Shimmick Common | Bowhead Specialty vs. Triton International Limited | Bowhead Specialty vs. Park Electrochemical |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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