Correlation Between Arrow Managed and Westwood High
Can any of the company-specific risk be diversified away by investing in both Arrow Managed and Westwood High 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 Westwood High 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 Westwood High Income, you can compare the effects of market volatilities on Arrow Managed and Westwood High 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 Westwood High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Westwood High.
Diversification Opportunities for Arrow Managed and Westwood High
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Arrow and Westwood is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Westwood High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood High Income 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 Westwood High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood High Income has no effect on the direction of Arrow Managed i.e., Arrow Managed and Westwood High go up and down completely randomly.
Pair Corralation between Arrow Managed and Westwood High
Assuming the 90 days horizon Arrow Managed Futures is expected to under-perform the Westwood High. In addition to that, Arrow Managed is 4.52 times more volatile than Westwood High Income. It trades about -0.01 of its total potential returns per unit of risk. Westwood High Income is currently generating about 0.12 per unit of volatility. If you would invest 888.00 in Westwood High Income on September 12, 2024 and sell it today you would earn a total of 136.00 from holding Westwood High Income or generate 15.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Managed Futures vs. Westwood High Income
Performance |
| Timeline |
| Arrow Managed Futures |
| Westwood High Income |
Arrow Managed and Westwood High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and Westwood High
The main advantage of trading using opposite Arrow Managed and Westwood High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Westwood High 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 Westwood High will offset losses from the drop in Westwood High's long position.| Arrow Managed vs. Artisan Small Cap | Arrow Managed vs. Mid Cap Growth | Arrow Managed vs. L Abbett Growth | Arrow Managed vs. Chase Growth Fund |
| Westwood High vs. Qs Defensive Growth | Westwood High vs. Praxis Growth Index | Westwood High vs. Franklin Growth Opportunities | Westwood High vs. Tfa Alphagen Growth |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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