Correlation Between Arrow Managed and American Funds
Can any of the company-specific risk be diversified away by investing in both Arrow Managed and American Funds 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 American Funds 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 American Funds 2050, you can compare the effects of market volatilities on Arrow Managed and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and American Funds.
Diversification Opportunities for Arrow Managed and American Funds
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and American is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and American Funds 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2050 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2050 has no effect on the direction of Arrow Managed i.e., Arrow Managed and American Funds go up and down completely randomly.
Pair Corralation between Arrow Managed and American Funds
Assuming the 90 days horizon Arrow Managed Futures is expected to under-perform the American Funds. In addition to that, Arrow Managed is 1.95 times more volatile than American Funds 2050. It trades about -0.03 of its total potential returns per unit of risk. American Funds 2050 is currently generating about 0.09 per unit of volatility. If you would invest 1,989 in American Funds 2050 on September 3, 2024 and sell it today you would earn a total of 166.00 from holding American Funds 2050 or generate 8.35% 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. American Funds 2050
Performance |
| Timeline |
| Arrow Managed Futures |
| American Funds 2050 |
Arrow Managed and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and American Funds
The main advantage of trading using opposite Arrow Managed and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Arrow Managed vs. Transamerica Funds | Arrow Managed vs. T Rowe Price | Arrow Managed vs. Cs 607 Tax | Arrow Managed vs. Intermediate Term Tax Free Bond |
| American Funds vs. Vanguard Target Retirement | American Funds vs. American Funds 2050 | American Funds vs. American Funds 2050 | American Funds vs. American Funds 2050 |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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