Correlation Between IES Holdings and Bowman Consulting

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

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

Diversification Opportunities for IES Holdings and Bowman Consulting

0.72

Correlation Coefficient

IES Holdings  Bowman Consulting

Poor diversification

The 3 months correlation between IES and Bowman is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding IES Holdings and Bowman Consulting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowman Consulting and IES 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 IES Holdings are associated (or correlated) with Bowman Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowman Consulting has no effect on the direction of IES Holdings i.e., IES Holdings and Bowman Consulting go up and down completely randomly.

Pair Corralation between IES Holdings and Bowman Consulting

Given the investment horizon of 90 days IES Holdings is expected to under-perform the Bowman Consulting. In addition to that, IES Holdings is 1.68 times more volatile than Bowman Consulting Group. It trades about -0.01 of its total potential returns per unit of risk. Bowman Consulting Group is currently generating about 0.01 per unit of volatility. If you would invest  2,459  in Bowman Consulting Group on December 24, 2024 and sell it today you would lose (26.00) from holding Bowman Consulting Group or give up 1.06% of portfolio value over 90 days.

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

IES Holdings  vs.  Bowman Consulting Group

IES Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days IES Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IES Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bowman Consulting

Risk-Adjusted Performance

Weak

Over the last 90 days Bowman Consulting Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Bowman Consulting is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IES Holdings and Bowman Consulting

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

The idea behind IES Holdings and Bowman Consulting Group 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.