Correlation Between Arrow Financial and Bar Harbor
Can any of the company-specific risk be diversified away by investing in both Arrow Financial and Bar Harbor 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 Arrow Financial and Bar Harbor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Financial and Bar Harbor Bankshares, you can compare the effects of market volatilities on Arrow Financial and Bar Harbor 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 Arrow Financial with a short position of Bar Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Financial and Bar Harbor.
Diversification Opportunities for Arrow Financial and Bar Harbor
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Arrow and Bar is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial and Bar Harbor Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bar Harbor Bankshares and Arrow Financial 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 Arrow Financial are associated (or correlated) with Bar Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bar Harbor Bankshares has no effect on the direction of Arrow Financial i.e., Arrow Financial and Bar Harbor go up and down completely randomly.
Pair Corralation between Arrow Financial and Bar Harbor
Given the investment horizon of 90 days Arrow Financial is expected to generate 1.58 times less return on investment than Bar Harbor. But when comparing it to its historical volatility, Arrow Financial is 1.02 times less risky than Bar Harbor. It trades about 0.02 of its potential returns per unit of risk. Bar Harbor Bankshares is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,794 in Bar Harbor Bankshares on August 24, 2024 and sell it today you would earn a total of 695.00 from holding Bar Harbor Bankshares or generate 24.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Arrow Financial vs. Bar Harbor Bankshares
Performance |
| Timeline |
| Arrow Financial |
| Bar Harbor Bankshares |
Arrow Financial and Bar Harbor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Financial and Bar Harbor
The main advantage of trading using opposite Arrow Financial and Bar Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Financial position performs unexpectedly, Bar Harbor 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 Bar Harbor will offset losses from the drop in Bar Harbor's long position.| Arrow Financial vs. Heritage Commerce Corp | Arrow Financial vs. Westamerica Bancorporation | Arrow Financial vs. Heritage Financial | Arrow Financial vs. National Bankshares |
| Bar Harbor vs. Camden National | Bar Harbor vs. Bank of Marin | Bar Harbor vs. Arrow Financial | Bar Harbor vs. Auburn National Bancorporation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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