Correlation Between OneSpaWorld Holdings and Bowlero Corp

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

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

Diversification Opportunities for OneSpaWorld Holdings and Bowlero Corp

0.14

Correlation Coefficient

OneSpaWorld Holdings  Bowlero Corp

Average diversification

The 3 months correlation between OneSpaWorld and Bowlero is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding OneSpaWorld Holdings and Bowlero Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowlero Corp and OneSpaWorld Holdings 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 OneSpaWorld Holdings are associated (or correlated) with Bowlero Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowlero Corp has no effect on the direction of OneSpaWorld Holdings i.e., OneSpaWorld Holdings and Bowlero Corp go up and down completely randomly.

Pair Corralation between OneSpaWorld Holdings and Bowlero Corp

Considering the 90-day investment horizon OneSpaWorld Holdings is expected to generate 0.57 times more return on investment than Bowlero Corp. However, OneSpaWorld Holdings is 1.75 times less risky than Bowlero Corp. It trades about 0.21 of its potential returns per unit of risk. Bowlero Corp is currently generating about -0.01 per unit of risk. If you would invest  1,633  in OneSpaWorld Holdings on September 18, 2024 and sell it today you would earn a total of  393.00  from holding OneSpaWorld Holdings or generate 24.07% return on investment over 90 days.

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

OneSpaWorld Holdings  vs.  Bowlero Corp

OneSpaWorld Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OneSpaWorld Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, OneSpaWorld Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Bowlero Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bowlero Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bowlero Corp 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 OneSpaWorld Holdings and Bowlero Corp

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

The idea behind OneSpaWorld Holdings and Bowlero 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.