Correlation Between Argo Group and London Stock

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

By analyzing existing cross correlation between Argo Group Limited and London Stock Exchange, you can compare the effects of market volatilities on Argo Group and London Stock 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 Argo Group with a short position of London Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Group and London Stock.

Diversification Opportunities for Argo Group and London Stock

-0.01

Correlation Coefficient

Argo Group  London Stock

Good diversification

The 3 months correlation between Argo and London is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Argo Group Limited and London Stock Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Stock Exchange and Argo Group 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 Argo Group Limited are associated (or correlated) with London Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Stock Exchange has no effect on the direction of Argo Group i.e., Argo Group and London Stock go up and down completely randomly.

Pair Corralation between Argo Group and London Stock

Assuming the 90 days trading horizon Argo Group Limited is expected to generate 2.17 times more return on investment than London Stock. However, Argo Group is 2.17 times more volatile than London Stock Exchange. It trades about 0.22 of its potential returns per unit of risk. London Stock Exchange is currently generating about 0.0 per unit of risk. If you would invest  375.00  in Argo Group Limited on September 25, 2024 and sell it today you would earn a total of  25.00  from holding Argo Group Limited or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Argo Group Limited  vs.  London Stock Exchange

Argo Group Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Group Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Argo Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

London Stock Exchange

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in London Stock Exchange are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, London Stock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Argo Group and London Stock

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

The idea behind Argo Group Limited and London Stock Exchange 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.