Correlation Between Arrow Financial and Solventum Corp
Can any of the company-specific risk be diversified away by investing in both Arrow Financial and Solventum Corp 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 Solventum Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Financial and Solventum Corp, you can compare the effects of market volatilities on Arrow Financial and Solventum Corp 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 Solventum Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Financial and Solventum Corp.
Diversification Opportunities for Arrow Financial and Solventum Corp
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and Solventum is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial and Solventum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solventum Corp 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 Solventum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solventum Corp has no effect on the direction of Arrow Financial i.e., Arrow Financial and Solventum Corp go up and down completely randomly.
Pair Corralation between Arrow Financial and Solventum Corp
Given the investment horizon of 90 days Arrow Financial is expected to generate 2.06 times less return on investment than Solventum Corp. But when comparing it to its historical volatility, Arrow Financial is 1.85 times less risky than Solventum Corp. It trades about 0.15 of its potential returns per unit of risk. Solventum Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 7,358 in Solventum Corp on December 4, 2024 and sell it today you would earn a total of 658.00 from holding Solventum Corp or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Financial vs. Solventum Corp
Performance |
| Timeline |
| Arrow Financial |
| Solventum Corp |
Arrow Financial and Solventum Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Financial and Solventum Corp
The main advantage of trading using opposite Arrow Financial and Solventum Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Financial position performs unexpectedly, Solventum Corp 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 Solventum Corp will offset losses from the drop in Solventum Corp's long position.| Arrow Financial vs. Heritage Commerce Corp | Arrow Financial vs. Westamerica Bancorporation | Arrow Financial vs. Heritage Financial | Arrow Financial vs. National Bankshares |
| Solventum Corp vs. Lincoln Electric Holdings | Solventum Corp vs. Fomento Economico Mexicano | Solventum Corp vs. Nyxoah | Solventum Corp vs. BBB Foods |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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