Correlation Between Arch Capital and Arch Capital
Can any of the company-specific risk be diversified away by investing in both Arch Capital and Arch Capital 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 Arch Capital 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 Arch Capital Group, you can compare the effects of market volatilities on Arch Capital and Arch Capital 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 Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and Arch Capital.
Diversification Opportunities for Arch Capital and Arch Capital
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arch and Arch is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and Arch Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Capital Group 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 Arch Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Capital Group has no effect on the direction of Arch Capital i.e., Arch Capital and Arch Capital go up and down completely randomly.
Pair Corralation between Arch Capital and Arch Capital
Assuming the 90 days horizon Arch Capital Group is expected to generate 1.3 times more return on investment than Arch Capital. However, Arch Capital is 1.3 times more volatile than Arch Capital Group. It trades about -0.13 of its potential returns per unit of risk. Arch Capital Group is currently generating about -0.19 per unit of risk. If you would invest 2,044 in Arch Capital Group on August 28, 2024 and sell it today you would lose (53.00) from holding Arch Capital Group or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arch Capital Group vs. Arch Capital Group
Performance |
| Timeline |
| Arch Capital Group |
| Arch Capital Group |
Arch Capital and Arch Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and Arch Capital
The main advantage of trading using opposite Arch Capital and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, Arch Capital 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 Arch Capital will offset losses from the drop in Arch Capital's long position.| Arch Capital vs. Enstar Group Limited | Arch Capital vs. Equitable Holdings | Arch Capital vs. Athene Holding | Arch Capital vs. Berkshire Hathaway |
| Arch Capital vs. Athene Holding | Arch Capital vs. The Hartford Financial | Arch Capital vs. Arch Capital Group | Arch Capital vs. Athene Holding |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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