Correlation Between Alphabet and Argo Group
Can any of the company-specific risk be diversified away by investing in both Alphabet 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 Alphabet and Argo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and Argo Group International, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Argo Group.
Diversification Opportunities for Alphabet and Argo Group
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alphabet and Argo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Argo Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group International and Alphabet 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 Alphabet Inc Class C 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 International has no effect on the direction of Alphabet i.e., Alphabet and Argo Group go up and down completely randomly.
Pair Corralation between Alphabet and Argo Group
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 1.56 times more return on investment than Argo Group. However, Alphabet is 1.56 times more volatile than Argo Group International. It trades about 0.07 of its potential returns per unit of risk. Argo Group International is currently generating about 0.04 per unit of risk. If you would invest 10,322 in Alphabet Inc Class C on August 27, 2024 and sell it today you would earn a total of 6,335 from holding Alphabet Inc Class C or generate 61.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. Argo Group International
Performance |
| Timeline |
| Alphabet Class C |
| Argo Group International |
Alphabet and Argo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and Argo Group
The main advantage of trading using opposite Alphabet and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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.The idea behind Alphabet Inc Class C and Argo Group International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Argo Group vs. Newpark Resources | Argo Group vs. Hurco Companies | Argo Group vs. Dream Finders Homes | Argo Group vs. Park Ohio Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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