Correlation Between Steadfast Group and Arthur J

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

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

Diversification Opportunities for Steadfast Group and Arthur J

0.56

Correlation Coefficient

Steadfast Group  Arthur J

Very weak diversification

The 3 months correlation between Steadfast and Arthur is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Steadfast Group Limited and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher and Steadfast 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 Steadfast Group Limited are associated (or correlated) with Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of Steadfast Group i.e., Steadfast Group and Arthur J go up and down completely randomly.

Pair Corralation between Steadfast Group and Arthur J

Assuming the 90 days horizon Steadfast Group Limited is expected to generate 1.26 times more return on investment than Arthur J. However, Steadfast Group is 1.26 times more volatile than Arthur J Gallagher. It trades about -0.04 of its potential returns per unit of risk. Arthur J Gallagher is currently generating about -0.23 per unit of risk. If you would invest  348.00  in Steadfast Group Limited on September 27, 2024 and sell it today you would lose (6.00) from holding Steadfast Group Limited or give up 1.72% of portfolio value over 90 days.

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

Steadfast Group Limited  vs.  Arthur J Gallagher

Steadfast Group

Risk-Adjusted Performance

0 of 100

Weak

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

Arthur J Gallagher

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arthur J Gallagher are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Arthur J may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Steadfast Group and Arthur J

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

The idea behind Steadfast Group Limited and Arthur J Gallagher 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.