Correlation Between Arbitrage Fund and The Arbitrage
Can any of the company-specific risk be diversified away by investing in both Arbitrage Fund and The Arbitrage 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 Arbitrage Fund and The Arbitrage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Arbitrage Fund and The Arbitrage Fund, you can compare the effects of market volatilities on Arbitrage Fund and The Arbitrage 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 Arbitrage Fund with a short position of The Arbitrage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbitrage Fund and The Arbitrage.
Diversification Opportunities for Arbitrage Fund and The Arbitrage
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Arbitrage and The is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding The Arbitrage Fund and The Arbitrage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Arbitrage and Arbitrage Fund 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 The Arbitrage Fund are associated (or correlated) with The Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Arbitrage has no effect on the direction of Arbitrage Fund i.e., Arbitrage Fund and The Arbitrage go up and down completely randomly.
Pair Corralation between Arbitrage Fund and The Arbitrage
Assuming the 90 days horizon The Arbitrage Fund is expected to generate 0.99 times more return on investment than The Arbitrage. However, The Arbitrage Fund is 1.01 times less risky than The Arbitrage. It trades about 0.08 of its potential returns per unit of risk. The Arbitrage Fund is currently generating about 0.08 per unit of risk. If you would invest 1,314 in The Arbitrage Fund on August 29, 2024 and sell it today you would earn a total of 44.00 from holding The Arbitrage Fund or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Arbitrage Fund vs. The Arbitrage Fund
Performance |
| Timeline |
| Arbitrage Fund |
| The Arbitrage |
Arbitrage Fund and The Arbitrage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbitrage Fund and The Arbitrage
The main advantage of trading using opposite Arbitrage Fund and The Arbitrage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbitrage Fund position performs unexpectedly, The Arbitrage 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 The Arbitrage will offset losses from the drop in The Arbitrage's long position.| Arbitrage Fund vs. Blackrock Financial Institutions | Arbitrage Fund vs. 1919 Financial Services | Arbitrage Fund vs. First Trust Specialty | Arbitrage Fund vs. T Rowe Price |
| The Arbitrage vs. Fidelity Advisor Financial | The Arbitrage vs. Mesirow Financial Small | The Arbitrage vs. Icon Financial Fund | The Arbitrage vs. Hennessy Large Cap |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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