Let me ask you for a suspension of disbelief. The same one you have to give when reading literature. So keep in an open mind

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Ok here goes:
Generally the difference between arrogance and self confidence is in the eye of the beholder, not the person showing the behavior.
After all, people have different personality styles. Some people are quietly confident and some people are loudly confident.
Usually its the degree their outard projection makes us uncomfortabe, annoyed or threatened determines whether we think them "confident" or "arrogant".
Whether their feelings of confidence is compensation for their insecurities is irrelevant.
Just as someone who reacts to their insecurities by being shy or whatever is irrelevant.
All that is important is that person's belief and behavior.
(edited to add)
I have been called both arrogant and confident, and been both admired and despised by people watching the exact same performance.
A better question would be: Do we think that people that project certain traits of confidence and strength are arrogant because of our insecurities?
That would be a much more telling question.