Correlation Between Reliance Global and Arthur J

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

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

Diversification Opportunities for Reliance Global and Arthur J

-0.8

Correlation Coefficient

Reliance Global  Arthur J

Pay attention - limited upside

The 3 months correlation between Reliance and Arthur is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Reliance Global Group 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 Reliance Global 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 Reliance Global Group 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 Reliance Global i.e., Reliance Global and Arthur J go up and down completely randomly.

Pair Corralation between Reliance Global and Arthur J

Given the investment horizon of 90 days Reliance Global Group is expected to under-perform the Arthur J. In addition to that, Reliance Global is 4.73 times more volatile than Arthur J Gallagher. It trades about -0.16 of its total potential returns per unit of risk. Arthur J Gallagher is currently generating about 0.24 per unit of volatility. If you would invest  28,392  in Arthur J Gallagher on December 29, 2024 and sell it today you would earn a total of  5,708  from holding Arthur J Gallagher or generate 20.1% return on investment over 90 days.

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

Reliance Global Group  vs.  Arthur J Gallagher

Reliance Global Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reliance Global Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Arthur J Gallagher

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arthur J Gallagher are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward-looking indicators, Arthur J reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reliance Global and Arthur J

The main advantage of trading using opposite Reliance Global and Arthur J positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reliance Global 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 Reliance Global Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.