Correlation Between Spyre Therapeutics and Bowhead Specialty

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

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

Diversification Opportunities for Spyre Therapeutics and Bowhead Specialty

0.02

Correlation Coefficient

Spyre Therapeutics  Bowhead Specialty

Significant diversification

The 3 months correlation between Spyre and Bowhead is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Spyre Therapeutics and Bowhead Specialty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowhead Specialty and Spyre Therapeutics 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 Spyre Therapeutics 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 Spyre Therapeutics i.e., Spyre Therapeutics and Bowhead Specialty go up and down completely randomly.

Pair Corralation between Spyre Therapeutics and Bowhead Specialty

Given the investment horizon of 90 days Spyre Therapeutics is expected to generate 1.37 times less return on investment than Bowhead Specialty. In addition to that, Spyre Therapeutics is 2.08 times more volatile than Bowhead Specialty Holdings. It trades about 0.05 of its total potential returns per unit of risk. Bowhead Specialty Holdings is currently generating about 0.15 per unit of volatility. If you would invest  2,380  in Bowhead Specialty Holdings on September 3, 2024 and sell it today you would earn a total of  1,261  from holding Bowhead Specialty Holdings or generate 52.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	53.85%
Values	Daily Returns

Spyre Therapeutics  vs.  Bowhead Specialty Holdings

Spyre Therapeutics

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Spyre Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Spyre Therapeutics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bowhead Specialty

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bowhead Specialty Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bowhead Specialty showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spyre Therapeutics and Bowhead Specialty

The main advantage of trading using opposite Spyre Therapeutics and Bowhead Specialty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spyre Therapeutics 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 Spyre Therapeutics 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.