Correlation Between Old Republic and Arch Capital
Can any of the company-specific risk be diversified away by investing in both Old Republic 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 Old Republic and Arch Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Arch Capital Group, you can compare the effects of market volatilities on Old Republic 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 Old Republic with a short position of Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Arch Capital.
Diversification Opportunities for Old Republic and Arch Capital
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Old and Arch is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International 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 Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and Arch Capital go up and down completely randomly.
Pair Corralation between Old Republic and Arch Capital
Considering the 90-day investment horizon Old Republic International is expected to generate 1.64 times more return on investment than Arch Capital. However, Old Republic is 1.64 times more volatile than Arch Capital Group. It trades about 0.38 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 3,530 in Old Republic International on August 28, 2024 and sell it today you would earn a total of 350.00 from holding Old Republic International or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Republic International vs. Arch Capital Group
Performance |
| Timeline |
| Old Republic Interna |
| Arch Capital Group |
Old Republic and Arch Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Arch Capital
The main advantage of trading using opposite Old Republic and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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.| Old Republic vs. Fiverr International | Old Republic vs. Pinterest | Old Republic vs. Upstart Holdings | Old Republic vs. Fastly Inc |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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