Correlation Between Arrowmark Financial and Sofina Société

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

By analyzing existing cross correlation between Arrowmark Financial Corp and Sofina Socit Anonyme, you can compare the effects of market volatilities on Arrowmark Financial and Sofina Société 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 Arrowmark Financial with a short position of Sofina Société. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrowmark Financial and Sofina Société.

Diversification Opportunities for Arrowmark Financial and Sofina Société

-0.32

Correlation Coefficient

Arrowmark Financial  Sofina Société

Very good diversification

The 3 months correlation between Arrowmark and Sofina is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Arrowmark Financial Corp and Sofina Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sofina Socit Anonyme and Arrowmark 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 Arrowmark Financial Corp are associated (or correlated) with Sofina Société. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sofina Socit Anonyme has no effect on the direction of Arrowmark Financial i.e., Arrowmark Financial and Sofina Société go up and down completely randomly.

Pair Corralation between Arrowmark Financial and Sofina Société

Given the investment horizon of 90 days Arrowmark Financial Corp is expected to generate 8.72 times more return on investment than Sofina Société. However, Arrowmark Financial is 8.72 times more volatile than Sofina Socit Anonyme. It trades about 0.19 of its potential returns per unit of risk. Sofina Socit Anonyme is currently generating about 0.0 per unit of risk. If you would invest  1,981  in Arrowmark Financial Corp on October 7, 2024 and sell it today you would earn a total of  140.00  from holding Arrowmark Financial Corp or generate 7.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Arrowmark Financial Corp  vs.  Sofina Socit Anonyme

Arrowmark Financial Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arrowmark Financial Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Arrowmark Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sofina Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofina Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sofina Société is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Arrowmark Financial and Sofina Société

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

The idea behind Arrowmark Financial Corp and Sofina Socit Anonyme 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.