Correlation Between Arrow Managed and Aberdeen Emerging
Can any of the company-specific risk be diversified away by investing in both Arrow Managed and Aberdeen Emerging 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 Aberdeen Emerging 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 Aberdeen Emerging Markets, you can compare the effects of market volatilities on Arrow Managed and Aberdeen Emerging 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 Aberdeen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Aberdeen Emerging.
Diversification Opportunities for Arrow Managed and Aberdeen Emerging
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and Aberdeen is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Aberdeen Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Emerging Markets 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 Aberdeen Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Emerging Markets has no effect on the direction of Arrow Managed i.e., Arrow Managed and Aberdeen Emerging go up and down completely randomly.
Pair Corralation between Arrow Managed and Aberdeen Emerging
Assuming the 90 days horizon Arrow Managed Futures is expected to under-perform the Aberdeen Emerging. In addition to that, Arrow Managed is 1.35 times more volatile than Aberdeen Emerging Markets. It trades about -0.05 of its total potential returns per unit of risk. Aberdeen Emerging Markets is currently generating about 0.02 per unit of volatility. If you would invest 1,343 in Aberdeen Emerging Markets on September 1, 2024 and sell it today you would earn a total of 35.00 from holding Aberdeen Emerging Markets or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Arrow Managed Futures vs. Aberdeen Emerging Markets
Performance |
| Timeline |
| Arrow Managed Futures |
| Aberdeen Emerging Markets |
Arrow Managed and Aberdeen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and Aberdeen Emerging
The main advantage of trading using opposite Arrow Managed and Aberdeen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Aberdeen Emerging 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 Aberdeen Emerging will offset losses from the drop in Aberdeen Emerging's long position.| Arrow Managed vs. Arrow Dwa Tactical | Arrow Managed vs. Arrow Dwa Tactical | Arrow Managed vs. Vanguard 500 Index | Arrow Managed vs. Allspring Global Dividend |
| Aberdeen Emerging vs. Nuveen Arizona Municipal | Aberdeen Emerging vs. Morningstar Municipal Bond | Aberdeen Emerging vs. Ab Impact Municipal | Aberdeen Emerging vs. Ishares Municipal Bond |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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