Correlation Between Arch Capital and American Electric
Can any of the company-specific risk be diversified away by investing in both Arch Capital and American Electric 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 American Electric 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 American Electric Power, you can compare the effects of market volatilities on Arch Capital and American Electric 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 American Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and American Electric.
Diversification Opportunities for Arch Capital and American Electric
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Arch and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and American Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Electric Power 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 American Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Electric Power has no effect on the direction of Arch Capital i.e., Arch Capital and American Electric go up and down completely randomly.
Pair Corralation between Arch Capital and American Electric
If you would invest 5,028 in American Electric Power on August 27, 2024 and sell it today you would earn a total of 0.00 from holding American Electric Power or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Arch Capital Group vs. American Electric Power
Performance |
| Timeline |
| Arch Capital Group |
| American Electric Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Arch Capital and American Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and American Electric
The main advantage of trading using opposite Arch Capital and American Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, American Electric 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 American Electric will offset losses from the drop in American Electric's long position.| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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