Correlation Between Arrow Financial and American Healthcare

Can any of the company-specific risk be diversified away by investing in both Arrow Financial and American Healthcare 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 Financial and American Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arrow Financial and American Healthcare REIT,, you can compare the effects of market volatilities on Arrow Financial and American Healthcare 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 Financial with a short position of American Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Financial and American Healthcare.

Diversification Opportunities for Arrow Financial and American Healthcare

0.55

Correlation Coefficient

Arrow Financial  American Healthcare

Very weak diversification

The 3 months correlation between Arrow and American is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial and American Healthcare REIT, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Healthcare REIT, and Arrow Financial 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 Financial are associated (or correlated) with American Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Healthcare REIT, has no effect on the direction of Arrow Financial i.e., Arrow Financial and American Healthcare go up and down completely randomly.

Pair Corralation between Arrow Financial and American Healthcare

Given the investment horizon of 90 days Arrow Financial is expected to generate 19.54 times less return on investment than American Healthcare. In addition to that, Arrow Financial is 1.4 times more volatile than American Healthcare REIT,. It trades about 0.01 of its total potential returns per unit of risk. American Healthcare REIT, is currently generating about 0.22 per unit of volatility. If you would invest  1,254  in American Healthcare REIT, on October 4, 2024 and sell it today you would earn a total of  1,522  from holding American Healthcare REIT, or generate 121.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	46.17%
Values	Daily Returns

Arrow Financial  vs.  American Healthcare REIT,

Arrow Financial

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Arrow Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Arrow Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

American Healthcare REIT,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, American Healthcare reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arrow Financial and American Healthcare

The main advantage of trading using opposite Arrow Financial and American Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Financial position performs unexpectedly, American Healthcare 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 American Healthcare will offset losses from the drop in American Healthcare's long position.

The idea behind Arrow Financial and American Healthcare REIT, pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.