Correlation Between Hartford Financial and Arch Capital
Can any of the company-specific risk be diversified away by investing in both Hartford Financial and Arch Capital 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 Hartford Financial and Arch Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Financial and Arch Capital Group, you can compare the effects of market volatilities on Hartford Financial and Arch Capital 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 Hartford Financial with a short position of Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Financial and Arch Capital.
Diversification Opportunities for Hartford Financial and Arch Capital
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hartford and Arch is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Financial and Arch Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Capital Group and Hartford 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 The Hartford Financial are associated (or correlated) with Arch Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Capital Group has no effect on the direction of Hartford Financial i.e., Hartford Financial and Arch Capital go up and down completely randomly.
Pair Corralation between Hartford Financial and Arch Capital
Assuming the 90 days trading horizon The Hartford Financial is expected to generate 0.68 times more return on investment than Arch Capital. However, The Hartford Financial is 1.48 times less risky than Arch Capital. It trades about 0.1 of its potential returns per unit of risk. Arch Capital Group is currently generating about -0.19 per unit of risk. If you would invest 2,488 in The Hartford Financial on August 28, 2024 and sell it today you would earn a total of 26.00 from holding The Hartford Financial or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hartford Financial vs. Arch Capital Group
Performance |
| Timeline |
| The Hartford Financial |
| Arch Capital Group |
Hartford Financial and Arch Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Financial and Arch Capital
The main advantage of trading using opposite Hartford Financial and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Financial position performs unexpectedly, Arch Capital 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 Arch Capital will offset losses from the drop in Arch Capital's long position.| Hartford Financial vs. Arch Capital Group | Hartford Financial vs. Athene Holding | Hartford Financial vs. Arch Capital Group | Hartford Financial vs. Athene Holding |
| Arch Capital vs. Athene Holding | Arch Capital vs. The Hartford Financial | Arch Capital vs. Arch Capital Group | Arch Capital vs. Athene Holding |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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