Correlation Between Arch Capital and Greene King

Can any of the company-specific risk be diversified away by investing in both Arch Capital and Greene King 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 Arch Capital and Greene King into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arch Capital Group and Greene King Plc, you can compare the effects of market volatilities on Arch Capital and Greene King 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 Arch Capital with a short position of Greene King. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and Greene King.

Diversification Opportunities for Arch Capital and Greene King

0.0

Correlation Coefficient

Arch Capital  Greene King

Pay attention - limited upside

The 3 months correlation between Arch and Greene is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and Greene King Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greene King Plc and Arch Capital 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 Arch Capital Group are associated (or correlated) with Greene King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greene King Plc has no effect on the direction of Arch Capital i.e., Arch Capital and Greene King go up and down completely randomly.

Pair Corralation between Arch Capital and Greene King

If you would invest  9,100  in Arch Capital Group on March 13, 2024 and sell it today you would earn a total of  868.00  from holding Arch Capital Group or generate 9.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Arch Capital Group  vs.  Greene King Plc

Arch Capital Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arch Capital Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Arch Capital may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Greene King Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greene King Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Greene King is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arch Capital and Greene King

The main advantage of trading using opposite Arch Capital and Greene King positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arch Capital position performs unexpectedly, Greene King 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 Greene King will offset losses from the drop in Greene King's long position.

The idea behind Arch Capital Group and Greene King Plc 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.