Correlation Between Arrow Managed and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Arrow Managed and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Short, you can compare the effects of market volatilities on Arrow Managed and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Managed and Goldman Sachs.
Diversification Opportunities for Arrow Managed and Goldman Sachs
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Arrow and Goldman is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Managed Futures and Goldman Sachs Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Short 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Short has no effect on the direction of Arrow Managed i.e., Arrow Managed and Goldman Sachs go up and down completely randomly.
Pair Corralation between Arrow Managed and Goldman Sachs
Assuming the 90 days horizon Arrow Managed Futures is expected to generate 10.02 times more return on investment than Goldman Sachs. However, Arrow Managed is 10.02 times more volatile than Goldman Sachs Short. It trades about 0.03 of its potential returns per unit of risk. Goldman Sachs Short is currently generating about 0.04 per unit of risk. If you would invest 587.00 in Arrow Managed Futures on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Arrow Managed Futures or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Arrow Managed Futures vs. Goldman Sachs Short
Performance |
| Timeline |
| Arrow Managed Futures |
| Goldman Sachs Short |
Arrow Managed and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Managed and Goldman Sachs
The main advantage of trading using opposite Arrow Managed and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Managed position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Arrow Managed vs. Vanguard Health Care | Arrow Managed vs. Alphacentric Lifesci Healthcare | Arrow Managed vs. Prudential Health Sciences | Arrow Managed vs. Deutsche Health And |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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