Correlation Between Winmark and Bowlin Travel

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

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

Diversification Opportunities for Winmark and Bowlin Travel

0.74

Correlation Coefficient

Winmark  Bowlin Travel

Poor diversification

The 3 months correlation between Winmark and Bowlin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Winmark and Bowlin Travel Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowlin Travel Centers and Winmark 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 Winmark are associated (or correlated) with Bowlin Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowlin Travel Centers has no effect on the direction of Winmark i.e., Winmark and Bowlin Travel go up and down completely randomly.

Pair Corralation between Winmark and Bowlin Travel

Given the investment horizon of 90 days Winmark is expected to under-perform the Bowlin Travel. In addition to that, Winmark is 1.81 times more volatile than Bowlin Travel Centers. It trades about -0.2 of its total potential returns per unit of risk. Bowlin Travel Centers is currently generating about -0.08 per unit of volatility. If you would invest  400.00  in Bowlin Travel Centers on December 29, 2024 and sell it today you would lose (20.00) from holding Bowlin Travel Centers or give up 5.0% of portfolio value over 90 days.

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

Winmark  vs.  Bowlin Travel Centers

Winmark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Winmark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bowlin Travel Centers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bowlin Travel Centers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bowlin Travel is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Winmark and Bowlin Travel

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

The idea behind Winmark and Bowlin Travel Centers 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.