Correlation Between Arch Capital and Equitable Holdings
Can any of the company-specific risk be diversified away by investing in both Arch Capital and Equitable Holdings 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 Equitable Holdings 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 Equitable Holdings, you can compare the effects of market volatilities on Arch Capital and Equitable Holdings 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 Equitable Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and Equitable Holdings.
Diversification Opportunities for Arch Capital and Equitable Holdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arch and Equitable is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Holdings 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 Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of Arch Capital i.e., Arch Capital and Equitable Holdings go up and down completely randomly.
Pair Corralation between Arch Capital and Equitable Holdings
Assuming the 90 days horizon Arch Capital Group is expected to under-perform the Equitable Holdings. But the preferred stock apears to be less risky and, when comparing its historical volatility, Arch Capital Group is 1.51 times less risky than Equitable Holdings. The preferred stock trades about -0.19 of its potential returns per unit of risk. The Equitable Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,905 in Equitable Holdings on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Equitable Holdings or generate 0.1% 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. Equitable Holdings
Performance |
| Timeline |
| Arch Capital Group |
| Equitable Holdings |
Arch Capital and Equitable Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and Equitable Holdings
The main advantage of trading using opposite Arch Capital and Equitable Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, Equitable Holdings 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 Equitable Holdings will offset losses from the drop in Equitable Holdings' long position.| Arch Capital vs. Athene Holding | Arch Capital vs. The Hartford Financial | Arch Capital vs. Arch Capital Group | Arch Capital vs. Athene Holding |
| Equitable Holdings vs. Enstar Group Limited | Equitable Holdings vs. Berkshire Hathaway | Equitable Holdings 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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