Correlation Between Industrial and Arch Capital
Can any of the company-specific risk be diversified away by investing in both Industrial 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 Industrial and Arch Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial and Commercial and Arch Capital Group, you can compare the effects of market volatilities on Industrial 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 Industrial with a short position of Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial and Arch Capital.
Diversification Opportunities for Industrial and Arch Capital
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and Arch is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial 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 Industrial 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 Industrial and Commercial 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 Industrial i.e., Industrial and Arch Capital go up and down completely randomly.
Pair Corralation between Industrial and Arch Capital
Assuming the 90 days horizon Industrial and Commercial is expected to generate 1.56 times more return on investment than Arch Capital. However, Industrial is 1.56 times more volatile than Arch Capital Group. It trades about 0.03 of its potential returns per unit of risk. Arch Capital Group is currently generating about 0.04 per unit of risk. If you would invest 52.00 in Industrial and Commercial on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Industrial and Commercial or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial and Commercial vs. Arch Capital Group
Performance |
| Timeline |
| Industrial and Commercial |
| Arch Capital Group |
Industrial and Arch Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial and Arch Capital
The main advantage of trading using opposite Industrial and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial 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.| Industrial vs. COMBA TELECOM SYST | Industrial vs. STMICROELECTRONICS | Industrial vs. Methode Electronics | Industrial vs. AOI Electronics Co |
| Arch Capital vs. Park Hotels Resorts | Arch Capital vs. Consolidated Communications Holdings | Arch Capital vs. Pebblebrook Hotel Trust | Arch Capital vs. NH HOTEL GROUP |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |