Correlation Between Value Line and Arrow Managed
Can any of the company-specific risk be diversified away by investing in both Value Line 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 Value Line and Arrow Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Line Small and Arrow Managed Futures, you can compare the effects of market volatilities on Value Line 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 Value Line with a short position of Arrow Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Line and Arrow Managed.
Diversification Opportunities for Value Line and Arrow Managed
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Value and Arrow is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Value Line Small 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 Value Line 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 Value Line Small 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 Value Line i.e., Value Line and Arrow Managed go up and down completely randomly.
Pair Corralation between Value Line and Arrow Managed
Assuming the 90 days horizon Value Line Small is expected to generate 0.94 times more return on investment than Arrow Managed. However, Value Line Small is 1.07 times less risky than Arrow Managed. It trades about 0.21 of its potential returns per unit of risk. Arrow Managed Futures is currently generating about 0.02 per unit of risk. If you would invest 6,240 in Value Line Small on August 30, 2024 and sell it today you would earn a total of 409.00 from holding Value Line Small or generate 6.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Line Small vs. Arrow Managed Futures
Performance |
| Timeline |
| Value Line Small |
| Arrow Managed Futures |
Value Line and Arrow Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Line and Arrow Managed
The main advantage of trading using opposite Value Line and Arrow Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Line 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.| Value Line vs. Dreyfusstandish Global Fixed | Value Line vs. Barings Global Floating | Value Line vs. Kinetics Global Fund | Value Line vs. Ab Global Bond |
| Arrow Managed vs. Pimco Trends Managed | Arrow Managed vs. HUMANA INC | Arrow Managed vs. Aquagold International | Arrow Managed vs. Barloworld Ltd ADR |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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