Correlation Between Arrow Financial and Nike
Can any of the company-specific risk be diversified away by investing in both Arrow Financial and Nike 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 Nike into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Financial and Nike Inc, you can compare the effects of market volatilities on Arrow Financial and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Financial and Nike.
Diversification Opportunities for Arrow Financial and Nike
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arrow and Nike is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Arrow Financial i.e., Arrow Financial and Nike go up and down completely randomly.
Pair Corralation between Arrow Financial and Nike
Given the investment horizon of 90 days Arrow Financial is expected to generate 2.16 times more return on investment than Nike. However, Arrow Financial is 2.16 times more volatile than Nike Inc. It trades about 0.21 of its potential returns per unit of risk. Nike Inc is currently generating about 0.08 per unit of risk. If you would invest 2,878 in Arrow Financial on September 4, 2024 and sell it today you would earn a total of 429.00 from holding Arrow Financial or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Financial vs. Nike Inc
Performance |
| Timeline |
| Arrow Financial |
| Nike Inc |
Arrow Financial and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Financial and Nike
The main advantage of trading using opposite Arrow Financial and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Financial position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.| Arrow Financial vs. Heritage Commerce Corp | Arrow Financial vs. Westamerica Bancorporation | Arrow Financial vs. Heritage Financial | Arrow Financial vs. National Bankshares |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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