Correlation Between Next PLC and Argo Group
Can any of the company-specific risk be diversified away by investing in both Next PLC 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 Next PLC and Argo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next PLC and Argo Group Limited, you can compare the effects of market volatilities on Next PLC 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 Next PLC with a short position of Argo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next PLC and Argo Group.
Diversification Opportunities for Next PLC and Argo Group
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Next and Argo is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Next PLC and Argo Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group Limited and Next PLC 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 Next PLC 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 Limited has no effect on the direction of Next PLC i.e., Next PLC and Argo Group go up and down completely randomly.
Pair Corralation between Next PLC and Argo Group
Assuming the 90 days trading horizon Next PLC is expected to generate 0.55 times more return on investment than Argo Group. However, Next PLC is 1.83 times less risky than Argo Group. It trades about 0.12 of its potential returns per unit of risk. Argo Group Limited is currently generating about 0.01 per unit of risk. If you would invest 979,000 in Next PLC on September 1, 2024 and sell it today you would earn a total of 29,000 from holding Next PLC or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Next PLC vs. Argo Group Limited
Performance |
| Timeline |
| Next PLC |
| Argo Group Limited |
Next PLC and Argo Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next PLC and Argo Group
The main advantage of trading using opposite Next PLC and Argo Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next PLC 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.| Next PLC vs. Ondine Biomedical | Next PLC vs. Europa Metals | Next PLC vs. Revolution Beauty Group | Next PLC vs. Moonpig Group PLC |
| Argo Group vs. Bank of Ireland | Argo Group vs. Atresmedia | Argo Group vs. Discover Financial Services | Argo Group vs. Live Nation Entertainment |
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 Stocks Directory module to find actively traded stocks across global markets.
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