Correlation Between Argonaut and Allcity Insurance

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

By analyzing existing cross correlation between Argonaut Group and Allcity Insurance Co, you can compare the effects of market volatilities on Argonaut and Allcity Insurance 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 Argonaut with a short position of Allcity Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argonaut and Allcity Insurance.

Diversification Opportunities for Argonaut and Allcity Insurance

0.0

Correlation Coefficient

Argonaut  Allcity Insurance

Pay attention - limited upside

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

Pair Corralation between Argonaut and Allcity Insurance

If you would invest (100.00) in Allcity Insurance Co on January 25, 2024 and sell it today you would earn a total of  100.00  from holding Allcity Insurance Co or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Argonaut Group  vs.  Allcity Insurance Co

Argonaut Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Argonaut Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Argonaut is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Allcity Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allcity Insurance Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Allcity Insurance is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Argonaut and Allcity Insurance

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

The idea behind Argonaut Group and Allcity Insurance Co 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.