Correlation Between Arrow Financial and CONSOLIDATED

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

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

Diversification Opportunities for Arrow Financial and CONSOLIDATED

-0.48

Correlation Coefficient

Arrow Financial  CONSOLIDATED

Very good diversification

The 3 months correlation between Arrow and CONSOLIDATED is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Financial and CONSOLIDATED EDISON N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON 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 CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON has no effect on the direction of Arrow Financial i.e., Arrow Financial and CONSOLIDATED go up and down completely randomly.

Pair Corralation between Arrow Financial and CONSOLIDATED

Given the investment horizon of 90 days Arrow Financial is expected to under-perform the CONSOLIDATED. In addition to that, Arrow Financial is 1.87 times more volatile than CONSOLIDATED EDISON N. It trades about -0.23 of its total potential returns per unit of risk. CONSOLIDATED EDISON N is currently generating about 0.19 per unit of volatility. If you would invest  9,760  in CONSOLIDATED EDISON N on September 17, 2024 and sell it today you would earn a total of  188.00  from holding CONSOLIDATED EDISON N or generate 1.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Arrow Financial  vs.  CONSOLIDATED EDISON N

Arrow Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Arrow Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CONSOLIDATED EDISON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSOLIDATED EDISON N has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSOLIDATED 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 CONSOLIDATED

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

The idea behind Arrow Financial and CONSOLIDATED EDISON N 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.