Correlation Between Arch Capital and CHS
Can any of the company-specific risk be diversified away by investing in both Arch Capital and CHS 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 CHS 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 CHS Inc CM, you can compare the effects of market volatilities on Arch Capital and CHS 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 CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and CHS.
Diversification Opportunities for Arch Capital and CHS
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arch and CHS is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and CHS Inc CM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc CM 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 CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc CM has no effect on the direction of Arch Capital i.e., Arch Capital and CHS go up and down completely randomly.
Pair Corralation between Arch Capital and CHS
Assuming the 90 days horizon Arch Capital Group is expected to generate 1.47 times more return on investment than CHS. However, Arch Capital is 1.47 times more volatile than CHS Inc CM. It trades about 0.06 of its potential returns per unit of risk. CHS Inc CM is currently generating about 0.02 per unit of risk. If you would invest 2,203 in Arch Capital Group on September 2, 2024 and sell it today you would earn a total of 98.00 from holding Arch Capital Group or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arch Capital Group vs. CHS Inc CM
Performance |
| Timeline |
| Arch Capital Group |
| CHS Inc CM |
Arch Capital and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and CHS
The main advantage of trading using opposite Arch Capital and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, CHS 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 CHS will offset losses from the drop in CHS'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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |