Correlation Between Arrow Financial and 00751YAJ5

Can any of the company-specific risk be diversified away by investing in both Arrow Financial and 00751YAJ5 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 00751YAJ5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arrow Financial and AAP 595 09 MAR 28, you can compare the effects of market volatilities on Arrow Financial and 00751YAJ5 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 00751YAJ5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Financial and 00751YAJ5.

Diversification Opportunities for Arrow Financial and 00751YAJ5

-0.34

Correlation Coefficient

Arrow Financial  00751YAJ5

Very good diversification

The 3 months correlation between Arrow and 00751YAJ5 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial and AAP 595 09 MAR 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAP 595 09 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 00751YAJ5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAP 595 09 has no effect on the direction of Arrow Financial i.e., Arrow Financial and 00751YAJ5 go up and down completely randomly.

Pair Corralation between Arrow Financial and 00751YAJ5

Given the investment horizon of 90 days Arrow Financial is expected to generate 3.34 times more return on investment than 00751YAJ5. However, Arrow Financial is 3.34 times more volatile than AAP 595 09 MAR 28. It trades about 0.1 of its potential returns per unit of risk. AAP 595 09 MAR 28 is currently generating about 0.05 per unit of risk. If you would invest  2,761  in Arrow Financial on September 11, 2024 and sell it today you would earn a total of  388.00  from holding Arrow Financial or generate 14.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Arrow Financial  vs.  AAP 595 09 MAR 28

Arrow Financial

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Financial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Arrow Financial showed solid returns over the last few months and may actually be approaching a breakup point.

AAP 595 09

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AAP 595 09 MAR 28 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 00751YAJ5 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arrow Financial and 00751YAJ5

The main advantage of trading using opposite Arrow Financial and 00751YAJ5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Financial position performs unexpectedly, 00751YAJ5 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 00751YAJ5 will offset losses from the drop in 00751YAJ5's long position.

The idea behind Arrow Financial and AAP 595 09 MAR 28 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.