Correlation Between Arrow ETF and Investment Managers
Can any of the company-specific risk be diversified away by investing in both Arrow ETF and Investment Managers 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 ETF and Investment Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow ETF Trust and Investment Managers Series, you can compare the effects of market volatilities on Arrow ETF and Investment Managers 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 ETF with a short position of Investment Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow ETF and Investment Managers.
Diversification Opportunities for Arrow ETF and Investment Managers
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arrow and Investment is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Arrow ETF Trust and Investment Managers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Managers and Arrow ETF 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 ETF Trust are associated (or correlated) with Investment Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Managers has no effect on the direction of Arrow ETF i.e., Arrow ETF and Investment Managers go up and down completely randomly.
Pair Corralation between Arrow ETF and Investment Managers
Given the investment horizon of 90 days Arrow ETF is expected to generate 1.44 times less return on investment than Investment Managers. In addition to that, Arrow ETF is 1.38 times more volatile than Investment Managers Series. It trades about 0.03 of its total potential returns per unit of risk. Investment Managers Series is currently generating about 0.07 per unit of volatility. If you would invest 1,189 in Investment Managers Series on August 29, 2024 and sell it today you would earn a total of 373.00 from holding Investment Managers Series or generate 31.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow ETF Trust vs. Investment Managers Series
Performance |
| Timeline |
| Arrow ETF Trust |
| Investment Managers |
Arrow ETF and Investment Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow ETF and Investment Managers
The main advantage of trading using opposite Arrow ETF and Investment Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow ETF position performs unexpectedly, Investment Managers 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 Investment Managers will offset losses from the drop in Investment Managers' long position.| Arrow ETF vs. iShares Morningstar Multi Asset | Arrow ETF vs. Amplify High Income | Arrow ETF vs. First Trust Multi Asset | Arrow ETF vs. SPDR SSgA Income |
| Investment Managers vs. VanEck Inflation Allocation | Investment Managers vs. Horizon Kinetics Inflation | Investment Managers vs. SPDR SSgA Multi Asset | Investment Managers vs. Simplify Interest Rate |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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