Correlation Between Arrow Financial and Stingray

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

By analyzing existing cross correlation between Arrow Financial and Stingray Group, you can compare the effects of market volatilities on Arrow Financial and Stingray 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 Stingray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Financial and Stingray.

Diversification Opportunities for Arrow Financial and Stingray

-0.35

Correlation Coefficient

Arrow Financial  Stingray

Very good diversification

The 3 months correlation between Arrow and Stingray is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial and Stingray Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stingray Group 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 Stingray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stingray Group has no effect on the direction of Arrow Financial i.e., Arrow Financial and Stingray go up and down completely randomly.

Pair Corralation between Arrow Financial and Stingray

Given the investment horizon of 90 days Arrow Financial is expected to under-perform the Stingray. But the stock apears to be less risky and, when comparing its historical volatility, Arrow Financial is 1.33 times less risky than Stingray. The stock trades about -0.05 of its potential returns per unit of risk. The Stingray Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  512.00  in Stingray Group on December 29, 2024 and sell it today you would earn a total of  122.00  from holding Stingray Group or generate 23.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Arrow Financial  vs.  Stingray Group

Arrow Financial

Risk-Adjusted Performance

Very 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.

Stingray Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stingray Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Stingray reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arrow Financial and Stingray

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

The idea behind Arrow Financial and Stingray Group 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.