Correlation Between Brighthouse Financial and Argo Group
Can any of the company-specific risk be diversified away by investing in both Brighthouse Financial and Argo Group 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 Brighthouse Financial and Argo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brighthouse Financial and Argo Group 65, you can compare the effects of market volatilities on Brighthouse Financial and Argo Group 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 Brighthouse Financial with a short position of Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brighthouse Financial and Argo Group.
Diversification Opportunities for Brighthouse Financial and Argo Group
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Brighthouse and Argo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Brighthouse Financial and Argo Group 65 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group 65 and Brighthouse Financial 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 Brighthouse Financial are associated (or correlated) with Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group 65 has no effect on the direction of Brighthouse Financial i.e., Brighthouse Financial and Argo Group go up and down completely randomly.
Pair Corralation between Brighthouse Financial and Argo Group
Assuming the 90 days horizon Brighthouse Financial is expected to generate 1.35 times less return on investment than Argo Group. But when comparing it to its historical volatility, Brighthouse Financial is 1.05 times less risky than Argo Group. It trades about 0.09 of its potential returns per unit of risk. Argo Group 65 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,170 in Argo Group 65 on September 2, 2024 and sell it today you would earn a total of 38.00 from holding Argo Group 65 or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brighthouse Financial vs. Argo Group 65
Performance |
| Timeline |
| Brighthouse Financial |
| Argo Group 65 |
Brighthouse Financial and Argo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brighthouse Financial and Argo Group
The main advantage of trading using opposite Brighthouse Financial and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brighthouse Financial position performs unexpectedly, Argo Group 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 Argo Group will offset losses from the drop in Argo Group's long position.| Brighthouse Financial vs. Brighthouse Financial | Brighthouse Financial vs. Unum Group | Brighthouse Financial vs. Argo Group 65 | Brighthouse Financial vs. Arch Capital Group |
| Argo Group vs. Brighthouse Financial | Argo Group vs. American Financial Group | Argo Group vs. CMS Energy Corp | Argo Group vs. Aegon Funding |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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