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 High, 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
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arrow and Western is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High 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 High 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 is expected to generate 9.91 times less return on investment than Western Asset. In addition to that, Arrow Managed is 5.2 times more volatile than Western Asset High. It trades about 0.0 of its total potential returns per unit of risk. Western Asset High is currently generating about 0.15 per unit of volatility. If you would invest 598.00 in Western Asset High on August 31, 2024 and sell it today you would earn a total of 108.00 from holding Western Asset High or generate 18.06% 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. Western Asset High
Performance |
| Timeline |
| Arrow Managed Futures |
| Western Asset High |
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. Aqr Managed Futures | Arrow Managed vs. Pimco Trends Managed | Arrow Managed vs. Pimco Trends Managed | Arrow Managed vs. American Beacon Ahl |
| Western Asset vs. Vanguard High Yield Corporate | Western Asset vs. Vanguard High Yield Porate | Western Asset vs. Blackrock Hi Yld | Western Asset vs. Blackrock High Yield |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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