Correlation Between Arrow Managed and World Energy
Can any of the company-specific risk be diversified away by investing in both Arrow Managed and World Energy 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 Managed and World Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Managed Futures and World Energy Fund, you can compare the effects of market volatilities on Arrow Managed and World Energy 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 Managed with a short position of World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and World Energy.
Diversification Opportunities for Arrow Managed and World Energy
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arrow and World is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy and Arrow Managed 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 Managed Futures are associated (or correlated) with World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Arrow Managed i.e., Arrow Managed and World Energy go up and down completely randomly.
Pair Corralation between Arrow Managed and World Energy
Assuming the 90 days horizon Arrow Managed is expected to generate 2.94 times less return on investment than World Energy. In addition to that, Arrow Managed is 1.13 times more volatile than World Energy Fund. It trades about 0.08 of its total potential returns per unit of risk. World Energy Fund is currently generating about 0.27 per unit of volatility. If you would invest 1,419 in World Energy Fund on August 31, 2024 and sell it today you would earn a total of 109.00 from holding World Energy Fund or generate 7.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Managed Futures vs. World Energy Fund
Performance |
| Timeline |
| Arrow Managed Futures |
| World Energy |
Arrow Managed and World Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and World Energy
The main advantage of trading using opposite Arrow Managed and World Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, World Energy 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 World Energy will offset losses from the drop in World Energy's long position.| Arrow Managed vs. Aqr Managed Futures | Arrow Managed vs. Pimco Trends Managed | Arrow Managed vs. Pimco Trends Managed | Arrow Managed vs. American Beacon Ahl |
| World Energy vs. Arrow Managed Futures | World Energy vs. Ab Bond Inflation | World Energy vs. Ab Bond Inflation | World Energy vs. Aqr Managed Futures |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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