Correlation Between Arrow Managed and Cullen Value
Can any of the company-specific risk be diversified away by investing in both Arrow Managed and Cullen Value 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 Cullen Value 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 Cullen Value Fund, you can compare the effects of market volatilities on Arrow Managed and Cullen Value 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 Cullen Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Cullen Value.
Diversification Opportunities for Arrow Managed and Cullen Value
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and Cullen is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Cullen Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Value 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 Cullen Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Value has no effect on the direction of Arrow Managed i.e., Arrow Managed and Cullen Value go up and down completely randomly.
Pair Corralation between Arrow Managed and Cullen Value
Assuming the 90 days horizon Arrow Managed is expected to generate 2.42 times less return on investment than Cullen Value. In addition to that, Arrow Managed is 2.17 times more volatile than Cullen Value Fund. It trades about 0.01 of its total potential returns per unit of risk. Cullen Value Fund is currently generating about 0.06 per unit of volatility. If you would invest 1,218 in Cullen Value Fund on September 4, 2024 and sell it today you would earn a total of 257.00 from holding Cullen Value Fund or generate 21.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Managed Futures vs. Cullen Value Fund
Performance |
| Timeline |
| Arrow Managed Futures |
| Cullen Value |
Arrow Managed and Cullen Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and Cullen Value
The main advantage of trading using opposite Arrow Managed and Cullen Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Cullen Value 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 Cullen Value will offset losses from the drop in Cullen Value's long position.| Arrow Managed vs. Growth Strategy Fund | Arrow Managed vs. Artisan Thematic Fund | Arrow Managed vs. Nationwide Global Equity | Arrow Managed vs. Volumetric Fund Volumetric |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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