Correlation Between Seagen and Arch Capital

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Can any of the company-specific risk be diversified away by investing in both Seagen and Arch Capital 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 Seagen and Arch Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seagen Inc and Arch Capital Group, you can compare the effects of market volatilities on Seagen and Arch Capital 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 Seagen with a short position of Arch Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seagen and Arch Capital.

Diversification Opportunities for Seagen and Arch Capital

-0.67
  Correlation Coefficient

Excellent diversification

The 1 month correlation between Seagen and Arch Capital is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Seagen Inc and Arch Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Capital Group and Seagen 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 Seagen Inc are associated (or correlated) with Arch Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Capital Group has no effect on the direction of Seagen i.e., Seagen and Arch Capital go up and down completely randomly.

Pair Corralation between Seagen and Arch Capital

Given the investment horizon of 90 days Seagen Inc is expected to under-perform the Arch Capital. In addition to that, Seagen is 1.53 times more volatile than Arch Capital Group. It trades about -0.03 of its total potential returns per unit of risk. Arch Capital Group is currently generating about 0.07 per unit of volatility. If you would invest  3,540  in Arch Capital Group on September 7, 2022 and sell it today you would earn a total of  2,465  from holding Arch Capital Group or generate 69.63% return on investment over 90 days.
Time Period1 Month [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Seagen Inc  vs.  Arch Capital Group

 Performance (%) 
       Timeline  
Seagen Inc 
Seagen Performance
0 of 100
Over the last 90 days Seagen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Seagen Price Channel

Arch Capital Group 
Arch Capital Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Arch Capital Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Arch Capital may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Arch Capital Price Channel

Seagen and Arch Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Seagen and Arch Capital

The main advantage of trading using opposite Seagen and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seagen position performs unexpectedly, Arch Capital 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 Arch Capital will offset losses from the drop in Arch Capital's long position.
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The idea behind Seagen Inc and Arch Capital Group 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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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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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