Correlation Between Argo Group and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Argo Group and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Argo Group and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Group and Dow Jones.
Diversification Opportunities for Argo Group and Dow Jones
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Argo and Dow is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Argo Group International and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Argo Group i.e., Argo Group and Dow Jones go up and down completely randomly.
Pair Corralation between Argo Group and Dow Jones
Assuming the 90 days trading horizon Argo Group is expected to generate 4.13 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Argo Group International is 3.64 times less risky than Dow Jones. It trades about 0.19 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,238,757 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 190,894 from holding Dow Jones Industrial or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argo Group International vs. Dow Jones Industrial
Performance |
| Timeline |
Argo Group and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Argo Group International
Pair trading matchups for Argo Group
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Argo Group and Dow Jones
The main advantage of trading using opposite Argo Group and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Group position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Argo Group vs. Newpark Resources | Argo Group vs. Hurco Companies | Argo Group vs. Dream Finders Homes | Argo Group vs. Park Ohio Holdings |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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