Correlation Between KVH Industries and Arrow Financial
Can any of the company-specific risk be diversified away by investing in both KVH Industries and Arrow Financial 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 KVH Industries and Arrow Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KVH Industries and Arrow Financial, you can compare the effects of market volatilities on KVH Industries and Arrow Financial 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 KVH Industries with a short position of Arrow Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of KVH Industries and Arrow Financial.
Diversification Opportunities for KVH Industries and Arrow Financial
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KVH and Arrow is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Financial and KVH Industries 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 KVH Industries are associated (or correlated) with Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of KVH Industries i.e., KVH Industries and Arrow Financial go up and down completely randomly.
Pair Corralation between KVH Industries and Arrow Financial
Given the investment horizon of 90 days KVH Industries is expected to generate 0.58 times more return on investment than Arrow Financial. However, KVH Industries is 1.73 times less risky than Arrow Financial. It trades about 0.44 of its potential returns per unit of risk. Arrow Financial is currently generating about 0.2 per unit of risk. If you would invest 460.00 in KVH Industries on September 2, 2024 and sell it today you would earn a total of 91.00 from holding KVH Industries or generate 19.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KVH Industries vs. Arrow Financial
Performance |
| Timeline |
| KVH Industries |
| Arrow Financial |
KVH Industries and Arrow Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KVH Industries and Arrow Financial
The main advantage of trading using opposite KVH Industries and Arrow Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KVH Industries position performs unexpectedly, Arrow Financial 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 Financial will offset losses from the drop in Arrow Financial's long position.| KVH Industries vs. Telesat Corp | KVH Industries vs. Comtech Telecommunications Corp | KVH Industries vs. Knowles Cor | KVH Industries vs. Ituran Location and |
| Arrow Financial vs. Affinity Bancshares | Arrow Financial vs. Auburn National Bancorporation | Arrow Financial vs. BayCom Corp | Arrow Financial vs. First Community |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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