Correlation Between Crawford and Arthur J

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

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

Diversification Opportunities for Crawford and Arthur J

-0.12

Correlation Coefficient

Crawford  Arthur J

Good diversification

The 3 months correlation between Crawford and Arthur is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Crawford Company 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 Crawford 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 Crawford Company 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 Crawford i.e., Crawford and Arthur J go up and down completely randomly.

Pair Corralation between Crawford and Arthur J

Assuming the 90 days horizon Crawford Company is expected to generate 1.89 times more return on investment than Arthur J. However, Crawford is 1.89 times more volatile than Arthur J Gallagher. It trades about 0.01 of its potential returns per unit of risk. Arthur J Gallagher is currently generating about -0.37 per unit of risk. If you would invest  1,104  in Crawford Company on October 6, 2024 and sell it today you would earn a total of  1.00  from holding Crawford Company or generate 0.09% return on investment over 90 days.

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

Crawford Company  vs.  Arthur J Gallagher

Crawford

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crawford Company are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Crawford is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Crawford and Arthur J

The main advantage of trading using opposite Crawford and Arthur J positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crawford 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 Crawford Company 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.