Correlation Between American Funds and Arrow Managed
Can any of the company-specific risk be diversified away by investing in both American Funds and Arrow Managed 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 American Funds and Arrow Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Arrow Managed Futures, you can compare the effects of market volatilities on American Funds and Arrow Managed 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 American Funds with a short position of Arrow Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Arrow Managed.
Diversification Opportunities for American Funds and Arrow Managed
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Arrow is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Arrow Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Managed Futures and American Funds 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 American Funds Fundamental are associated (or correlated) with Arrow Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Managed Futures has no effect on the direction of American Funds i.e., American Funds and Arrow Managed go up and down completely randomly.
Pair Corralation between American Funds and Arrow Managed
Assuming the 90 days horizon American Funds Fundamental is expected to generate 0.58 times more return on investment than Arrow Managed. However, American Funds Fundamental is 1.73 times less risky than Arrow Managed. It trades about 0.07 of its potential returns per unit of risk. Arrow Managed Futures is currently generating about -0.01 per unit of risk. If you would invest 6,056 in American Funds Fundamental on November 28, 2024 and sell it today you would earn a total of 2,110 from holding American Funds Fundamental or generate 34.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Arrow Managed Futures
Performance |
| Timeline |
| American Funds Funda |
| Arrow Managed Futures |
American Funds and Arrow Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Arrow Managed
The main advantage of trading using opposite American Funds and Arrow Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Arrow Managed 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 Arrow Managed will offset losses from the drop in Arrow Managed's long position.| American Funds vs. Global Gold Fund | American Funds vs. Deutsche Gold Precious | American Funds vs. Wells Fargo Advantage | American Funds vs. World Precious Minerals |
| Arrow Managed vs. Us Government Securities | Arrow Managed vs. Inverse Government Long | Arrow Managed vs. John Hancock Government | Arrow Managed vs. Us Government Securities |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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