Correlation Between Malvern International and Argo Group

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

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

Diversification Opportunities for Malvern International and Argo Group

-0.01

Correlation Coefficient

Malvern International  Argo Group

Good diversification

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

Pair Corralation between Malvern International and Argo Group

Assuming the 90 days trading horizon Malvern International is expected to generate 0.69 times more return on investment than Argo Group. However, Malvern International is 1.45 times less risky than Argo Group. It trades about 0.06 of its potential returns per unit of risk. Argo Group Limited is currently generating about 0.02 per unit of risk. If you would invest  1,850  in Malvern International on September 23, 2024 and sell it today you would earn a total of  100.00  from holding Malvern International or generate 5.41% return on investment over 90 days.

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

Malvern International  vs.  Argo Group Limited

Malvern International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Malvern International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Malvern International is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Malvern International and Argo Group

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

The idea behind Malvern International and Argo Group Limited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.