Correlation Between Arrow Managed and Western Asset
Can any of the company-specific risk be diversified away by investing in both Arrow Managed and Western Asset 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 Western Asset 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 Western Asset E, you can compare the effects of market volatilities on Arrow Managed and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Western Asset.
Diversification Opportunities for Arrow Managed and Western Asset
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arrow and Western is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset E has no effect on the direction of Arrow Managed i.e., Arrow Managed and Western Asset go up and down completely randomly.
Pair Corralation between Arrow Managed and Western Asset
Assuming the 90 days horizon Arrow Managed Futures is expected to generate 3.44 times more return on investment than Western Asset. However, Arrow Managed is 3.44 times more volatile than Western Asset E. It trades about 0.32 of its potential returns per unit of risk. Western Asset E is currently generating about 0.15 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 | 100.0% |
| Values | Daily Returns |
Arrow Managed Futures vs. Western Asset E
Performance |
| Timeline |
| Arrow Managed Futures |
| Western Asset E |
Arrow Managed and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and Western Asset
The main advantage of trading using opposite Arrow Managed and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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