Correlation Between Arch Capital and Armada Acquisition
Can any of the company-specific risk be diversified away by investing in both Arch Capital and Armada Acquisition 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 Arch Capital and Armada Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arch Capital Group and Armada Acquisition Corp, you can compare the effects of market volatilities on Arch Capital and Armada Acquisition 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 Arch Capital with a short position of Armada Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and Armada Acquisition.
Diversification Opportunities for Arch Capital and Armada Acquisition
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arch and Armada is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and Armada Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Acquisition Corp and Arch Capital 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 Arch Capital Group are associated (or correlated) with Armada Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Acquisition Corp has no effect on the direction of Arch Capital i.e., Arch Capital and Armada Acquisition go up and down completely randomly.
Pair Corralation between Arch Capital and Armada Acquisition
Assuming the 90 days horizon Arch Capital Group is expected to generate 0.14 times more return on investment than Armada Acquisition. However, Arch Capital Group is 7.37 times less risky than Armada Acquisition. It trades about 0.06 of its potential returns per unit of risk. Armada Acquisition Corp is currently generating about -0.05 per unit of risk. If you would invest 1,687 in Arch Capital Group on September 3, 2024 and sell it today you would earn a total of 307.00 from holding Arch Capital Group or generate 18.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 79.35% |
| Values | Daily Returns |
Arch Capital Group vs. Armada Acquisition Corp
Performance |
| Timeline |
| Arch Capital Group |
| Armada Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Arch Capital and Armada Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and Armada Acquisition
The main advantage of trading using opposite Arch Capital and Armada Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, Armada Acquisition 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 Armada Acquisition will offset losses from the drop in Armada Acquisition's long position.| Arch Capital vs. Arch Capital Group | Arch Capital vs. The Allstate | Arch Capital vs. Brighthouse Financial | Arch Capital vs. Athene Holding |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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