Correlation Between Arrow DWA and Discipline Fund
Can any of the company-specific risk be diversified away by investing in both Arrow DWA and Discipline Fund 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 DWA and Discipline Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow DWA Tactical and Discipline Fund ETF, you can compare the effects of market volatilities on Arrow DWA and Discipline Fund 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 DWA with a short position of Discipline Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow DWA and Discipline Fund.
Diversification Opportunities for Arrow DWA and Discipline Fund
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arrow and Discipline is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Arrow DWA Tactical and Discipline Fund ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discipline Fund ETF and Arrow DWA 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 DWA Tactical are associated (or correlated) with Discipline Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discipline Fund ETF has no effect on the direction of Arrow DWA i.e., Arrow DWA and Discipline Fund go up and down completely randomly.
Pair Corralation between Arrow DWA and Discipline Fund
Given the investment horizon of 90 days Arrow DWA Tactical is expected to generate 2.18 times more return on investment than Discipline Fund. However, Arrow DWA is 2.18 times more volatile than Discipline Fund ETF. It trades about 0.15 of its potential returns per unit of risk. Discipline Fund ETF is currently generating about 0.12 per unit of risk. If you would invest 1,176 in Arrow DWA Tactical on October 25, 2024 and sell it today you would earn a total of 28.90 from holding Arrow DWA Tactical or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow DWA Tactical vs. Discipline Fund ETF
Performance |
| Timeline |
| Arrow DWA Tactical |
| Discipline Fund ETF |
Arrow DWA and Discipline Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow DWA and Discipline Fund
The main advantage of trading using opposite Arrow DWA and Discipline Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow DWA position performs unexpectedly, Discipline Fund 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 Discipline Fund will offset losses from the drop in Discipline Fund's long position.| Arrow DWA vs. Arrow DWA Tactical | Arrow DWA vs. FlexShares Real Assets | Arrow DWA vs. First Trust Income | Arrow DWA vs. VictoryShares Discovery Enhanced |
| Discipline Fund vs. ATAC Rotation ETF | Discipline Fund vs. Amplify BlackSwan ISWN | Discipline Fund vs. Tidal ETF Trust | Discipline Fund vs. Aptus Defined Risk |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |