Correlation Between Fabwx and Arrow Managed
Can any of the company-specific risk be diversified away by investing in both Fabwx and Arrow Managed 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 Fabwx and Arrow Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabwx and Arrow Managed Futures, you can compare the effects of market volatilities on Fabwx and Arrow Managed 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 Fabwx with a short position of Arrow Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabwx and Arrow Managed.
Diversification Opportunities for Fabwx and Arrow Managed
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fabwx and Arrow is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fabwx and Arrow Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Managed Futures and Fabwx 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 Fabwx are associated (or correlated) with Arrow Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Managed Futures has no effect on the direction of Fabwx i.e., Fabwx and Arrow Managed go up and down completely randomly.
Pair Corralation between Fabwx and Arrow Managed
Assuming the 90 days horizon Fabwx is expected to generate 0.84 times more return on investment than Arrow Managed. However, Fabwx is 1.19 times less risky than Arrow Managed. It trades about 0.32 of its potential returns per unit of risk. Arrow Managed Futures is currently generating about 0.11 per unit of risk. If you would invest 1,499 in Fabwx on October 23, 2024 and sell it today you would earn a total of 59.00 from holding Fabwx or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.78% |
| Values | Daily Returns |
Fabwx vs. Arrow Managed Futures
Performance |
| Timeline |
| Fabwx |
| Arrow Managed Futures |
Fabwx and Arrow Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabwx and Arrow Managed
The main advantage of trading using opposite Fabwx and Arrow Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabwx position performs unexpectedly, Arrow Managed 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 Arrow Managed will offset losses from the drop in Arrow Managed's long position.| Fabwx vs. Vanguard Total Stock | Fabwx vs. Vanguard 500 Index | Fabwx vs. Vanguard Total Stock | Fabwx vs. Vanguard Total Stock |
| Arrow Managed vs. Predex Funds | Arrow Managed vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Arrow Managed vs. Commodities Strategy Fund | Arrow Managed vs. L Abbett Fundamental |
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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