Correlation Between FORWARD AIR and Arch Capital

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

Diversification Opportunities for FORWARD AIR and Arch Capital

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between FORWARD and Arch is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P 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 FORWARD AIR 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 FORWARD AIR P 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 FORWARD AIR i.e., FORWARD AIR and Arch Capital go up and down completely randomly.

Pair Corralation between FORWARD AIR and Arch Capital

Assuming the 90 days horizon FORWARD AIR P is expected to generate 2.74 times more return on investment than Arch Capital. However, FORWARD AIR is 2.74 times more volatile than Arch Capital Group. It trades about 0.22 of its potential returns per unit of risk. Arch Capital Group is currently generating about -0.07 per unit of risk. If you would invest  1,330  in FORWARD AIR P on April 23, 2025 and sell it today you would earn a total of  985.00  from holding FORWARD AIR P or generate 74.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

FORWARD AIR P  vs.  Arch Capital Group

 Performance 
       Timeline  
FORWARD AIR P 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in FORWARD AIR P are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FORWARD AIR reported solid returns over the last few months and may actually be approaching a breakup point.
Arch Capital Group 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Arch Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

FORWARD AIR and Arch Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FORWARD AIR and Arch Capital

The main advantage of trading using opposite FORWARD AIR and Arch Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR 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.
The idea behind FORWARD AIR P 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.
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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