Correlation Between Arthur J and TWFG,

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

By analyzing existing cross correlation between Arthur J Gallagher and TWFG, Class A, you can compare the effects of market volatilities on Arthur J and TWFG, 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 Arthur J with a short position of TWFG,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arthur J and TWFG,.

Diversification Opportunities for Arthur J and TWFG,

0.63

Correlation Coefficient

Arthur J  TWFG,

Poor diversification

The 3 months correlation between Arthur and TWFG, is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Arthur J Gallagher and TWFG, Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TWFG, Class A and Arthur J 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 Arthur J Gallagher are associated (or correlated) with TWFG,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TWFG, Class A has no effect on the direction of Arthur J i.e., Arthur J and TWFG, go up and down completely randomly.

Pair Corralation between Arthur J and TWFG,

Considering the 90-day investment horizon Arthur J is expected to generate 16.16 times less return on investment than TWFG,. But when comparing it to its historical volatility, Arthur J Gallagher is 2.13 times less risky than TWFG,. It trades about 0.01 of its potential returns per unit of risk. TWFG, Class A is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,677  in TWFG, Class A on September 19, 2024 and sell it today you would earn a total of  359.00  from holding TWFG, Class A or generate 13.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Arthur J Gallagher  vs.  TWFG, Class A

Arthur J Gallagher

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arthur J Gallagher has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, Arthur J is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

TWFG, Class A

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TWFG, Class A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, TWFG, reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arthur J and TWFG,

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

The idea behind Arthur J Gallagher and TWFG, Class A 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.