Correlation Between Arrow Managed and Kensington Active
Can any of the company-specific risk be diversified away by investing in both Arrow Managed and Kensington Active 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 Kensington Active 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 Kensington Active Advantage, you can compare the effects of market volatilities on Arrow Managed and Kensington Active 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 Kensington Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Kensington Active.
Diversification Opportunities for Arrow Managed and Kensington Active
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Arrow and Kensington is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Kensington Active Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Active 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 Kensington Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Active has no effect on the direction of Arrow Managed i.e., Arrow Managed and Kensington Active go up and down completely randomly.
Pair Corralation between Arrow Managed and Kensington Active
Assuming the 90 days horizon Arrow Managed Futures is expected to under-perform the Kensington Active. In addition to that, Arrow Managed is 3.56 times more volatile than Kensington Active Advantage. It trades about -0.01 of its total potential returns per unit of risk. Kensington Active Advantage is currently generating about 0.09 per unit of volatility. If you would invest 898.00 in Kensington Active Advantage on September 12, 2024 and sell it today you would earn a total of 132.00 from holding Kensington Active Advantage or generate 14.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Arrow Managed Futures vs. Kensington Active Advantage
Performance |
| Timeline |
| Arrow Managed Futures |
| Kensington Active |
Arrow Managed and Kensington Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and Kensington Active
The main advantage of trading using opposite Arrow Managed and Kensington Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Kensington Active 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 Kensington Active will offset losses from the drop in Kensington Active's long position.| Arrow Managed vs. Artisan Small Cap | Arrow Managed vs. Mid Cap Growth | Arrow Managed vs. L Abbett Growth | Arrow Managed vs. Chase Growth Fund |
| Kensington Active vs. Schwab Treasury Inflation | Kensington Active vs. Lord Abbett Inflation | Kensington Active vs. Atac Inflation Rotation | Kensington Active vs. Arrow 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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