Correlation Between Lindblad Expeditions and Arrow Financial

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

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

Diversification Opportunities for Lindblad Expeditions and Arrow Financial

0.95

Correlation Coefficient

Lindblad Expeditions  Arrow Financial

Almost no diversification

The 3 months correlation between Lindblad and Arrow is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Lindblad Expeditions Holdings and Arrow Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Financial and Lindblad Expeditions 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 Lindblad Expeditions Holdings are associated (or correlated) with Arrow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Financial has no effect on the direction of Lindblad Expeditions i.e., Lindblad Expeditions and Arrow Financial go up and down completely randomly.

Pair Corralation between Lindblad Expeditions and Arrow Financial

Given the investment horizon of 90 days Lindblad Expeditions Holdings is expected to under-perform the Arrow Financial. In addition to that, Lindblad Expeditions is 2.73 times more volatile than Arrow Financial. It trades about -0.17 of its total potential returns per unit of risk. Arrow Financial is currently generating about -0.12 per unit of volatility. If you would invest  3,272  in Arrow Financial on September 18, 2024 and sell it today you would lose (94.00) from holding Arrow Financial or give up 2.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Lindblad Expeditions Holdings  vs.  Arrow Financial

Lindblad Expeditions

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lindblad Expeditions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Arrow Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arrow Financial are ranked lower than 5 (%) 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.

Pair Trading with Lindblad Expeditions and Arrow Financial

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

The idea behind Lindblad Expeditions Holdings and Arrow Financial 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..