Correlation Between Arrow Managed and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Arrow Managed and Old Westbury 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 Old Westbury 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 Old Westbury Short Term, you can compare the effects of market volatilities on Arrow Managed and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Old Westbury.
Diversification Opportunities for Arrow Managed and Old Westbury
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arrow and Old is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Old Westbury Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Short 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Short has no effect on the direction of Arrow Managed i.e., Arrow Managed and Old Westbury go up and down completely randomly.
Pair Corralation between Arrow Managed and Old Westbury
Assuming the 90 days horizon Arrow Managed Futures is expected to generate 13.15 times more return on investment than Old Westbury. However, Arrow Managed is 13.15 times more volatile than Old Westbury Short Term. It trades about 0.02 of its potential returns per unit of risk. Old Westbury Short Term is currently generating about 0.08 per unit of risk. If you would invest 555.00 in Arrow Managed Futures on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Arrow Managed Futures or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Managed Futures vs. Old Westbury Short Term
Performance |
| Timeline |
| Arrow Managed Futures |
| Old Westbury Short |
Arrow Managed and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and Old Westbury
The main advantage of trading using opposite Arrow Managed and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Arrow Managed vs. The Hartford Small | Arrow Managed vs. Touchstone Small Cap | Arrow Managed vs. Chartwell Small Cap | Arrow Managed vs. Ancorathelen Small Mid Cap |
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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 Stocks Directory module to find actively traded stocks across global markets.
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