Correlation Between Paysafe and Bowhead Specialty

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

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

Diversification Opportunities for Paysafe and Bowhead Specialty

-0.45

Correlation Coefficient

Paysafe  Bowhead Specialty

Very good diversification

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

Pair Corralation between Paysafe and Bowhead Specialty

Given the investment horizon of 90 days Paysafe is expected to under-perform the Bowhead Specialty. In addition to that, Paysafe is 2.08 times more volatile than Bowhead Specialty Holdings. It trades about -0.06 of its total potential returns per unit of risk. Bowhead Specialty Holdings is currently generating about 0.06 per unit of volatility. If you would invest  2,942  in Bowhead Specialty Holdings on October 25, 2024 and sell it today you would earn a total of  195.00  from holding Bowhead Specialty Holdings or generate 6.63% return on investment over 90 days.

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

Paysafe  vs.  Bowhead Specialty Holdings

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe 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 technical and fundamental 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

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bowhead Specialty Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Bowhead Specialty may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Paysafe and Bowhead Specialty

The main advantage of trading using opposite Paysafe and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paysafe 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 Paysafe 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.