Correlation Between Ab New and Arrow Managed
Can any of the company-specific risk be diversified away by investing in both Ab New and Arrow Managed 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 Ab New and Arrow Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab New Jersey and Arrow Managed Futures, you can compare the effects of market volatilities on Ab New and Arrow Managed 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 Ab New with a short position of Arrow Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab New and Arrow Managed.
Diversification Opportunities for Ab New and Arrow Managed
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ANJCX and Arrow is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ab New Jersey and Arrow Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Managed Futures and Ab New 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 Ab New Jersey are associated (or correlated) with Arrow Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Managed Futures has no effect on the direction of Ab New i.e., Ab New and Arrow Managed go up and down completely randomly.
Pair Corralation between Ab New and Arrow Managed
Assuming the 90 days horizon Ab New is expected to generate 6.05 times less return on investment than Arrow Managed. But when comparing it to its historical volatility, Ab New Jersey is 10.04 times less risky than Arrow Managed. It trades about 0.51 of its potential returns per unit of risk. Arrow Managed Futures is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 543.00 in Arrow Managed Futures on September 13, 2024 and sell it today you would earn a total of 40.00 from holding Arrow Managed Futures or generate 7.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab New Jersey vs. Arrow Managed Futures
Performance |
| Timeline |
| Ab New Jersey |
| Arrow Managed Futures |
Ab New and Arrow Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab New and Arrow Managed
The main advantage of trading using opposite Ab New and Arrow Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab New position performs unexpectedly, Arrow Managed 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 Arrow Managed will offset losses from the drop in Arrow Managed's long position.The idea behind Ab New Jersey and Arrow Managed Futures 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.| Arrow Managed vs. 1919 Financial Services | Arrow Managed vs. Davis Financial Fund | Arrow Managed vs. Vanguard Financials Index | Arrow Managed vs. Prudential Jennison Financial |
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 CEOs Directory module to screen CEOs from public companies around the world.
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