Correlation Between Arch Capital and International General
Can any of the company-specific risk be diversified away by investing in both Arch Capital and International General 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 International General 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 International General Insurance, you can compare the effects of market volatilities on Arch Capital and International General 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 International General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and International General.
Diversification Opportunities for Arch Capital and International General
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arch and International is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and International General Insuranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International General 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 International General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International General has no effect on the direction of Arch Capital i.e., Arch Capital and International General go up and down completely randomly.
Pair Corralation between Arch Capital and International General
Assuming the 90 days horizon Arch Capital Group is expected to under-perform the International General. But the preferred stock apears to be less risky and, when comparing its historical volatility, Arch Capital Group is 3.87 times less risky than International General. The preferred stock trades about -0.24 of its potential returns per unit of risk. The International General Insurance is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,239 in International General Insurance on August 30, 2024 and sell it today you would earn a total of 421.00 from holding International General Insurance or generate 18.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arch Capital Group vs. International General Insuranc
Performance |
| Timeline |
| Arch Capital Group |
| International General |
Arch Capital and International General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arch Capital and International General
The main advantage of trading using opposite Arch Capital and International General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, International General 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 International General will offset losses from the drop in International General'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 |
| International General vs. Enstar Group Limited | International General vs. Axa Equitable Holdings | International General vs. Arch Capital Group | International General vs. Waterdrop ADR |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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