Correlation Between Arch Capital and BB Seguridade

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

By analyzing existing cross correlation between Arch Capital Group and BB Seguridade Participacoes, you can compare the effects of market volatilities on Arch Capital and BB Seguridade 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 Arch Capital with a short position of BB Seguridade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arch Capital and BB Seguridade.

Diversification Opportunities for Arch Capital and BB Seguridade

-0.49

Correlation Coefficient

Arch Capital  BB Seguridade

Very good diversification

The 3 months correlation between Arch and BBSEY is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Arch Capital Group and BB Seguridade Participacoes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BB Seguridade Partic and Arch Capital 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 Arch Capital Group are associated (or correlated) with BB Seguridade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BB Seguridade Partic has no effect on the direction of Arch Capital i.e., Arch Capital and BB Seguridade go up and down completely randomly.

Pair Corralation between Arch Capital and BB Seguridade

Assuming the 90 days horizon Arch Capital Group is expected to generate 0.27 times more return on investment than BB Seguridade. However, Arch Capital Group is 3.75 times less risky than BB Seguridade. It trades about 0.1 of its potential returns per unit of risk. BB Seguridade Participacoes is currently generating about -0.17 per unit of risk. If you would invest  2,013  in Arch Capital Group on May 5, 2025 and sell it today you would earn a total of  67.00  from holding Arch Capital Group or generate 3.33% return on investment over 90 days.

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

Arch Capital Group  vs.  BB Seguridade Participacoes

Arch Capital Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arch Capital Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Arch Capital is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BB Seguridade Partic

Risk-Adjusted Performance

Very Weak

Over the last 90 days BB Seguridade Participacoes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Arch Capital and BB Seguridade

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

The idea behind Arch Capital Group and BB Seguridade Participacoes 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.