Correlation Between FirstCash and Bowen Acquisition

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

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

Diversification Opportunities for FirstCash and Bowen Acquisition

-0.69

Correlation Coefficient

FirstCash  Bowen Acquisition

Excellent diversification

The 3 months correlation between FirstCash and Bowen is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and Bowen Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowen Acquisition Corp and FirstCash 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 FirstCash are associated (or correlated) with Bowen Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowen Acquisition Corp has no effect on the direction of FirstCash i.e., FirstCash and Bowen Acquisition go up and down completely randomly.

Pair Corralation between FirstCash and Bowen Acquisition

Given the investment horizon of 90 days FirstCash is expected to under-perform the Bowen Acquisition. In addition to that, FirstCash is 9.18 times more volatile than Bowen Acquisition Corp. It trades about -0.08 of its total potential returns per unit of risk. Bowen Acquisition Corp is currently generating about 0.13 per unit of volatility. If you would invest  1,079  in Bowen Acquisition Corp on October 9, 2024 and sell it today you would earn a total of  15.00  from holding Bowen Acquisition Corp or generate 1.39% return on investment over 90 days.

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

FirstCash  vs.  Bowen Acquisition Corp

FirstCash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FirstCash has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Bowen Acquisition Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bowen Acquisition Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bowen Acquisition is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FirstCash and Bowen Acquisition

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

The idea behind FirstCash and Bowen Acquisition Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.