Correlation Between Bowman Consulting and JGC Corp

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

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

Diversification Opportunities for Bowman Consulting and JGC Corp

-0.56

Correlation Coefficient

Bowman Consulting  JGC Corp

Excellent diversification

The 3 months correlation between Bowman and JGC is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bowman Consulting Group and JGC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGC Corp and Bowman Consulting 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 Bowman Consulting Group are associated (or correlated) with JGC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JGC Corp has no effect on the direction of Bowman Consulting i.e., Bowman Consulting and JGC Corp go up and down completely randomly.

Pair Corralation between Bowman Consulting and JGC Corp

Given the investment horizon of 90 days Bowman Consulting Group is expected to generate 1.35 times more return on investment than JGC Corp. However, Bowman Consulting is 1.35 times more volatile than JGC Corp. It trades about 0.11 of its potential returns per unit of risk. JGC Corp is currently generating about -0.02 per unit of risk. If you would invest  2,268  in Bowman Consulting Group on September 4, 2024 and sell it today you would earn a total of  397.00  from holding Bowman Consulting Group or generate 17.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Bowman Consulting Group  vs.  JGC Corp

Bowman Consulting

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bowman Consulting Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Bowman Consulting displayed solid returns over the last few months and may actually be approaching a breakup point.

JGC Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JGC Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, JGC Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bowman Consulting and JGC Corp

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

The idea behind Bowman Consulting Group and JGC 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.