Correlation Between Arrow Managed and Total Return
Can any of the company-specific risk be diversified away by investing in both Arrow Managed and Total Return 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 Total Return 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 Total Return Bond, you can compare the effects of market volatilities on Arrow Managed and Total Return 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 Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Total Return.
Diversification Opportunities for Arrow Managed and Total Return
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arrow and Total is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Total Return Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return Bond 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 Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return Bond has no effect on the direction of Arrow Managed i.e., Arrow Managed and Total Return go up and down completely randomly.
Pair Corralation between Arrow Managed and Total Return
Assuming the 90 days horizon Arrow Managed Futures is expected to generate 4.28 times more return on investment than Total Return. However, Arrow Managed is 4.28 times more volatile than Total Return Bond. It trades about 0.23 of its potential returns per unit of risk. Total Return Bond is currently generating about 0.17 per unit of risk. If you would invest 543.00 in Arrow Managed Futures on September 13, 2024 and sell it today you would earn a total of 32.00 from holding Arrow Managed Futures or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Arrow Managed Futures vs. Total Return Bond
Performance |
| Timeline |
| Arrow Managed Futures |
| Total Return Bond |
Arrow Managed and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and Total Return
The main advantage of trading using opposite Arrow Managed and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.| Arrow Managed vs. Money Market Obligations | Arrow Managed vs. Elfun Government Money | Arrow Managed vs. Hewitt Money Market | Arrow Managed vs. Putnam Money Market |
| Total Return vs. Wells Fargo Advantage | Total Return vs. Wells Fargo Advantage | Total Return vs. Wells Fargo Advantage | Total Return vs. Wells Fargo Ultra |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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