Correlation Between Arrow Managed and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Arrow Managed and Sterling Capital 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 Sterling Capital 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 Sterling Capital Securitized, you can compare the effects of market volatilities on Arrow Managed and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Sterling Capital.
Diversification Opportunities for Arrow Managed and Sterling Capital
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arrow and Sterling is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Sterling Capital Securitized in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Sec 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Sec has no effect on the direction of Arrow Managed i.e., Arrow Managed and Sterling Capital go up and down completely randomly.
Pair Corralation between Arrow Managed and Sterling Capital
Assuming the 90 days horizon Arrow Managed Futures is expected to generate 3.91 times more return on investment than Sterling Capital. However, Arrow Managed is 3.91 times more volatile than Sterling Capital Securitized. It trades about 0.32 of its potential returns per unit of risk. Sterling Capital Securitized is currently generating about 0.16 per unit of risk. If you would invest 524.00 in Arrow Managed Futures on September 4, 2024 and sell it today you would earn a total of 43.00 from holding Arrow Managed Futures or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Arrow Managed Futures vs. Sterling Capital Securitized
Performance |
| Timeline |
| Arrow Managed Futures |
| Sterling Capital Sec |
Arrow Managed and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and Sterling Capital
The main advantage of trading using opposite Arrow Managed and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Arrow Managed vs. Growth Strategy Fund | Arrow Managed vs. Artisan Thematic Fund | Arrow Managed vs. Nationwide Global Equity | Arrow Managed vs. Volumetric Fund Volumetric |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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