Correlation Between Loews Corp and Archrock

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

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

Diversification Opportunities for Loews Corp and Archrock

-0.18

Correlation Coefficient

Loews Corp  Archrock

Good diversification

The 3 months correlation between Loews and Archrock is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and Loews Corp 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 Loews Corp are associated (or correlated) with Archrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archrock has no effect on the direction of Loews Corp i.e., Loews Corp and Archrock go up and down completely randomly.

Pair Corralation between Loews Corp and Archrock

Taking into account the 90-day investment horizon Loews Corp is expected to generate 0.56 times more return on investment than Archrock. However, Loews Corp is 1.79 times less risky than Archrock. It trades about 0.08 of its potential returns per unit of risk. Archrock is currently generating about -0.02 per unit of risk. If you would invest  8,672  in Loews Corp on May 6, 2025 and sell it today you would earn a total of  357.00  from holding Loews Corp or generate 4.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.32%
Values	Daily Returns

Loews Corp  vs.  Archrock

Loews Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Loews Corp is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Archrock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Archrock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Archrock is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Loews Corp and Archrock

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

The idea behind Loews Corp and Archrock 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.