Correlation Between Argo Group and RLI Corp
Can any of the company-specific risk be diversified away by investing in both Argo Group and RLI Corp 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 RLI Corp 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 RLI Corp, you can compare the effects of market volatilities on Argo Group and RLI Corp 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 RLI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Group and RLI Corp.
Diversification Opportunities for Argo Group and RLI Corp
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Argo and RLI is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Argo Group International and RLI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLI Corp 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 RLI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLI Corp has no effect on the direction of Argo Group i.e., Argo Group and RLI Corp go up and down completely randomly.
Pair Corralation between Argo Group and RLI Corp
Assuming the 90 days trading horizon Argo Group International is expected to generate 0.14 times more return on investment than RLI Corp. However, Argo Group International is 7.01 times less risky than RLI Corp. It trades about 0.18 of its potential returns per unit of risk. RLI Corp is currently generating about -0.24 per unit of risk. If you would invest 2,492 in Argo Group International on October 20, 2024 and sell it today you would earn a total of 16.00 from holding Argo Group International or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argo Group International vs. RLI Corp
Performance |
| Timeline |
| Argo Group International |
| RLI Corp |
Argo Group and RLI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argo Group and RLI Corp
The main advantage of trading using opposite Argo Group and RLI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Group position performs unexpectedly, RLI Corp 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 RLI Corp will offset losses from the drop in RLI Corp's long position.| Argo Group vs. Zoom Video Communications | Argo Group vs. Zijin Mining Group | Argo Group vs. RadNet Inc | Argo Group vs. Universal Music Group |
| RLI Corp vs. Horace Mann Educators | RLI Corp vs. Kemper | RLI Corp vs. Global Indemnity PLC | RLI Corp vs. Argo Group International |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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