Correlation Between Arch Capital and Fundamental Global
Can any of the company-specific risk be diversified away by investing in both Arch Capital and Fundamental Global 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 Fundamental Global 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 Fundamental Global, you can compare the effects of market volatilities on Arch Capital and Fundamental Global 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 Fundamental Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and Fundamental Global.
Diversification Opportunities for Arch Capital and Fundamental Global
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arch and Fundamental is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and Fundamental Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Global 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 Fundamental Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Global has no effect on the direction of Arch Capital i.e., Arch Capital and Fundamental Global go up and down completely randomly.
Pair Corralation between Arch Capital and Fundamental Global
Assuming the 90 days horizon Arch Capital Group is expected to under-perform the Fundamental Global. But the preferred stock apears to be less risky and, when comparing its historical volatility, Arch Capital Group is 4.62 times less risky than Fundamental Global. The preferred stock trades about -0.08 of its potential returns per unit of risk. The Fundamental Global is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,496 in Fundamental Global on August 24, 2024 and sell it today you would earn a total of 245.00 from holding Fundamental Global or generate 16.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arch Capital Group vs. Fundamental Global
Performance |
| Timeline |
| Arch Capital Group |
| Fundamental Global |
Arch Capital and Fundamental Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and Fundamental Global
The main advantage of trading using opposite Arch Capital and Fundamental Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, Fundamental Global 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 Fundamental Global will offset losses from the drop in Fundamental Global's long position.| Arch Capital vs. Arch Capital Group | Arch Capital vs. The Allstate | Arch Capital vs. Brighthouse Financial | Arch Capital vs. Athene Holding |
| Fundamental Global vs. Enstar Group Limited | Fundamental Global vs. Equitable Holdings | Fundamental Global vs. Athene Holding | Fundamental Global 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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