Correlation Between Bowman Consulting and Business First

Can any of the company-specific risk be diversified away by investing in both Bowman Consulting and Business First 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 Business First 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 Business First Bancshares, you can compare the effects of market volatilities on Bowman Consulting and Business First 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 Business First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowman Consulting and Business First.

Diversification Opportunities for Bowman Consulting and Business First

0.6

Correlation Coefficient

Bowman Consulting  Business First

Poor diversification

The 3 months correlation between Bowman and Business is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bowman Consulting Group and Business First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Business First Bancshares 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 Business First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Business First Bancshares has no effect on the direction of Bowman Consulting i.e., Bowman Consulting and Business First go up and down completely randomly.

Pair Corralation between Bowman Consulting and Business First

Given the investment horizon of 90 days Bowman Consulting Group is expected to generate 1.34 times more return on investment than Business First. However, Bowman Consulting is 1.34 times more volatile than Business First Bancshares. It trades about 0.06 of its potential returns per unit of risk. Business First Bancshares is currently generating about 0.03 per unit of risk. If you would invest  2,383  in Bowman Consulting Group on May 6, 2025 and sell it today you would earn a total of  973.00  from holding Bowman Consulting Group or generate 40.83% return on investment over 90 days.

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

Bowman Consulting Group  vs.  Business First Bancshares

Bowman Consulting

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bowman Consulting Group are ranked lower than 24 (%) 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.

Business First Bancshares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Business First Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Business First is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bowman Consulting and Business First

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

The idea behind Bowman Consulting Group and Business First Bancshares 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.