Correlation Between Argo Group and Allstate
Can any of the company-specific risk be diversified away by investing in both Argo Group and Allstate 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 Argo Group and Allstate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argo Group International and The Allstate, you can compare the effects of market volatilities on Argo Group and Allstate 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 Argo Group with a short position of Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Group and Allstate.
Diversification Opportunities for Argo Group and Allstate
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Argo and Allstate is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Argo Group International and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and Argo Group 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 Argo Group International are associated (or correlated) with Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Argo Group i.e., Argo Group and Allstate go up and down completely randomly.
Pair Corralation between Argo Group and Allstate
Assuming the 90 days trading horizon Argo Group is expected to generate 9.25 times less return on investment than Allstate. But when comparing it to its historical volatility, Argo Group International is 5.22 times less risky than Allstate. It trades about 0.15 of its potential returns per unit of risk. The Allstate is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 18,812 in The Allstate on August 26, 2024 and sell it today you would earn a total of 1,568 from holding The Allstate or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argo Group International vs. The Allstate
Performance |
| Timeline |
| Argo Group International |
| Allstate |
Argo Group and Allstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argo Group and Allstate
The main advantage of trading using opposite Argo Group and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Group position performs unexpectedly, Allstate 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 Allstate will offset losses from the drop in Allstate's long position.| Argo Group vs. Loews Corp | Argo Group vs. Chubb | Argo Group vs. American Financial Group | Argo Group vs. Assurant |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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