Correlation Between Arthur J and Crawford

Can any of the company-specific risk be diversified away by investing in both Arthur J and Crawford 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 Crawford 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 Crawford Company, you can compare the effects of market volatilities on Arthur J and Crawford 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 Crawford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arthur J and Crawford.

Diversification Opportunities for Arthur J and Crawford

0.04

Correlation Coefficient

Arthur J  Crawford

Significant diversification

The 3 months correlation between Arthur and Crawford is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Arthur J Gallagher and Crawford Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crawford 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 Crawford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crawford has no effect on the direction of Arthur J i.e., Arthur J and Crawford go up and down completely randomly.

Pair Corralation between Arthur J and Crawford

Considering the 90-day investment horizon Arthur J is expected to generate 3.7 times less return on investment than Crawford. But when comparing it to its historical volatility, Arthur J Gallagher is 1.99 times less risky than Crawford. It trades about 0.03 of its potential returns per unit of risk. Crawford Company is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,111  in Crawford Company on October 21, 2024 and sell it today you would earn a total of  83.00  from holding Crawford Company or generate 7.47% return on investment over 90 days.

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

Arthur J Gallagher  vs.  Crawford Company

Arthur J Gallagher

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arthur J Gallagher are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Crawford

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Crawford Company are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Crawford may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Arthur J and Crawford

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

The idea behind Arthur J Gallagher and Crawford Company 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.